RioZim shut down mines, issues further cautionary

Harare – In a cautionary statement on the Zimbabwe Stock Exchange on Thursday, RioZim Limited said the challenges arising from the Company’s inability to access sufficient foreign currency from the Reserve Bank of Zimbabwe (RBZ) to support its operations has gravitated and the Company’s issue and it has directly engaged ministries of Finance and Mines.

Recently the miner said it has not received its foreign currency earnings since 2016 from the central bank and has sort to take legal action demanding that the RBZ complies with its directives and policies, and also, for compensation for any losses that the Company has suffered as result of the Bank’s non-compliance with its directives from 2016 to date.

According to Government statute Gold miners are entitled to access 50 percent of their receipts in foreign exchange automatically in their nostro accounts and the balance 50 percent by application.

However this policy was adjusted as at 1 October 2018 to suit the current economic conditions reviewing down the automatic forex deposit down to 30 percent.

“Further to the cautionary statement published on the 10th of October 2018, the Board of RioZim Limited would like to update the Company’s shareholders, all other stakeholders and members of the public that, the challenges arising from the Company’s inability to access sufficient foreign currency to support its operations remain an issue.

“However, discussions on this matter are ongoing with the Reserve Bank of Zimbabwe.In the meantime, the Company’s operations at Cam and Motor Mine, Dalny Mine and Renco Mine involuntarily stopped operations until sufficient foreign currency can be accessed.”

In addition to the engagements with the Reserve Bank of Zimbabwe, the Company said it is  directly and indirectly via the Chamber of Mines engaging the Ministry of Finance, the Ministry of Mines and other key stakeholders in order to resume operations as soon as is possible.

Directors advice the shareholders of RioZim Limited, all other stakeholders and the public to exercise caution and consult their professional advisors when dealing in the shares of the Company.

RioZim said it has only received 15 percent of their foreign receipts over the past two years and this has resulted in the Company’s failure to pay its external suppliers consequently resulting in an escalation cost on the back of local supplies.

The impact of this on the Company’s operations has been that the Company is unable to pay its external suppliers and consequently, its costs have escalated as the price of locally available consumables and spares increased exponentially when compared to the prices quoted by external suppliers for the same products.

RioZim’s production capacity has increased by 20 percent ahead of the same comparative period of the 6 months to June 2018 producing 1 055kgs up from 873kgs.

Prior to their shutdown the three mines contribution stood at 165kgs a month.

The company is expecting for the mines to up their contribution to gold production by 81 percent in the three mines volumes over the next two years to 300kgs, once they manage to re-open after their foreign currency challenges are met by the central bank.

The three mines employee base is about 2600 and the closure impact on the national unemployment levels.

RioZim, is a listed mining company on Zimbabwe Stock Exchange and it is involved in the mining of diamonds, nickel and gold which remain the major revenue generator.

The mining company is the second best in terms of deliveries of gold in the primary mining sector after Metallon Gold who is the largest producer in Zimbabwe.

– Equity Axis News

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Equity Axis is an online financial media service platform focused on African markets offering real-time stock quotes, news, analysis and data.

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