RioZim Limited shareholders have injected $19 billion to prop up the troubled resources outfit, which last week reported wide-ranging write downs for the half-year period to June 30, 2022.
Output in the Zimbabwe Stock Exchange-listed group’s flagship gold interest fell by 30%, as diamonds operation Murowa suspended production shifting to processing low grade stockpiled dumps.
At Murowa, output for the period fell 52% below prior year, according to chairperson Saleem Rashid BeebeeJaun, who raised the red flag over the group’s going concern status.
Dalny Mine slipped into care and maintenance and its shafts were subsequently flooded.
Output at Renco Mine plunged by 37%, as an industrial action rattled production, compounded by rolling blackouts.
Dalny Mine saw its output plummet by 92% during the period, and was placed under care and maintenance after a six-month period under review.
One Step Mine also suspended operations underlining a turbulent period that saw Empress Metal Refinery continue under care and maintenance.
A BIOX plant, which was commissioned during the period, suffered from “teething problems”, according to corporate affairs executive Wilson Gwatiringa.
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Group losses worsened to $5,4 billion, from $2,6 billion during the comparable period in 2021, with RioZim’s working capital deficit hitting $13 billion.
In an angry reaction to NewsDay Business’ report on the write downs last week, Gwatiringa revealed that shareholders were digging deeper into their pockets to pay for key commitments including salaries, “cognisant of its responsibilities to the economy and the country.”
As the same time, he argued: “The company is not financially distressed as the article seeks to suggest.”
“The company’s major shareholders continue to put in money whenever there is need,” Gwatiringa said.
“The principal shareholders remain ready and willing to support the company as and when the need for financial support arises.
“Shareholders have brought in money across the years as required and there is a current balance of shareholder loans of $19 billion on the company books. Funds from the principal shareholder were critical in ensuring that the company retooled, continued operating and paid salaries while BIOX was stabilising. The group continues to receive substantial financial support from its major shareholder through shareholder loans to stabilise working capital,” he said.
Gwatiringa described NewsDay’s report as “a farrago of misrepresentations, misapprehensions, misdirection and misunderstanding.”
He did not say what was misrepresented by the report, which was based on the resources firm’s financial results released last week.
BeebeeJaun had said the firm’s going concern status was under threat.
“As at the reporting date the group’s current liabilities exceeded current assets by $13,1 billion,” Saleem Rashid said, noting that this figure was $2,7 billion only six months earlier.
“The group reported a net loss for the period of $5,4 billion (June 2021 $1,5 billion). The group’s gold production for the period was subdued as operations were significantly impacted by suspension of operations at Dalny Mine and One Step which negatively affected production volumes at Dalny and Cam & Motor Mine respectively,” he said.
“These factors ordinarily indicate the existence of a material uncertainty on the group’s ability to continue as a going concern and that it may be unable to realise its assets and discharge its liabilities in the normal course of business,” the RioZim boss noted.
Gwatiringa, however, insisted that the firm was not under threat.
“Of the current liabilities appearing in the financial statements, circa $9,7 billion was funded by shareholders and hence poses no threat to the company,” he said.
“The liabilities of $22 billion, therefore, should be considered without the $9,7 billion which is owed to shareholders. The company is not financially distressed as the article seeks to suggest. The company remains optimistic of a positive turnaround given the measures that the company took to stabilise and improve operations.”
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