Zimbabwe Stock Exchange- listed resources firm RioZim is set to raise $10 million from existing shareholders to fund the reopening of the Cam & Motor gold mining project and retire other obligations.
In a notice yesterday, RioZim said it will make a renounceable offer of 66 666 667 ordinary shares of a nominal value of $0,01 each in the company’s share capital, at a subscription price of $0,15 each to existing shareholders in the ratio of 124,931 new ordinary share for every 100 ordinary shares already held by shareholders.
Shareholders have to approve the capital raising initiative at an extraordinary general meeting on February 19.
Of the total money to be raised, plant and equipment will cost $3 070 000, power supply ($480 000), civils ($2 380 000) and tailings and relocation will cost $450 000 and $290 000 respectively.
The balance will go to refinancing of funds already expended and general purposes, cost of the capital raising initiative, security and fencing, Environmental Impact Assessment, and geology and mine planning software and oxygen tank.
Before its closure in 1968, Cam & Motor has historically been the largest gold producer in Zimbabwe having produced 5 291 100 ounces of gold.
RioZim said recent geological and metallurgic tests revealed that with the current technology and at the current grades of ore, Cam & Motor “is capable of producing significant amounts of gold at a competitive cost of production”.
“Geological exploration in the form of evaluation drilling has delineated a gold resource totalling approximately 6 377 300 tonnes of ore at an average grade of 4,8 grammes per tonne, which equates to 893 330 ounces of gold,” it said.
RioZim said it had placed an order for 1 500 tonnes per day plant which at full capacity was expected to produce more than 3 000 ounces of gold per month.
GEM RioZim Investments Limited — a 24,97% shareholder in the listed firm — will underwrite the transaction.
RioZim said GEM has also agreed to advance the company $700 000 to continue progress on the project “while the rights issue process is underway”. The money in addition to other amounts advanced by GEM would be treated as part of their subscription of its rights, RioZim said.
In the six months ended June 30 2014 financial results, RioZim widened its losses to $7,47 million from $2,311 million, attributed to lower production at its two mines and reduced gold and copper prices.