Troubled Zimbabwe Stock Exchange mining concern, RioZim Limited, is retrenching nearly 120 employees, as the debt-ridden firm streamlines its operations, sources have said.
Market sources close to developments at RioZim said the job cuts would affect shop floor workers up to senior management.
“The retrenchment exercise is underway,” the source said.
“The company is retrenching because they cannot sustain the wage bill and GEM (Raintree) doesn’t have the money to rescue the mining company.”
Efforts to get a comment from RioZim Limited yesterday were fruitless as human resources general manager Rufaro Pasipanodya had not responded to questions emailed by NewsDay on Monday.
RioZim, which was facing a crisis due to a huge debt, recently carried a rights offer in a bid to remain afloat.
The mining company owes $50 million to local banks.
During its right issue, underwriters, GEM Raintree failed to underwrite the $5 million rights issue, which resulted in Old Mutual Life Assurance sub-underwriting the capital raising initiative. At least six million rights offer shares were taken up from a total of 10 million.Old Mutual held a 19,5% stake in the company.
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Plans by RioZim to raise more capital hit a snag last month after its annual general meeting was postponed amid reports the firm’s financial statements were in shambles.
The mining group is currently seeking $10 million through a private placement and an additional $45 million through convertible debentures to GEM Raintree.
“The postponement is due to the late finalisation of the annual report and possible adjustments and or reclassification resulting from information that has recently come to light,” RioZim said in a statement. NewsDay’s sister paper, The Zimbabwe Independent reported that the mining concern was projecting an $8 million loss in the full-year to December due to poor performance of Empress Nickel Refinery.
The group is expecting to return to profitability in 2013, forecasting a profit of $20,8 million. The company projected its revenue to grow to $62,2 million and $131 million in 2013 and 2016 respectively.
