- RioZim is in final negotiations with a potential investor to acquire a majority stake in the company
- The company is facing ongoing financial hardships, compounded by operational challenges at its mines
- The company previously required a government bailout in 2016 and has faced ongoing financial difficulties since
Harare-RioZim Limited, once a prominent gold mining and metallurgical company listed on the Zimbabwe Stock Exchange (ZSE), is currently in the final stages of negotiations with a potential lender to address its ongoing financial and operational difficulties.
In a latest press release, the company announced that major shareholders have been engaged in discussions with various interested parties and are nearing a conclusion with an investor aiming to acquire a majority stake in the company.
"The major shareholders have been in discussion with several interested parties and are now in the final stages of negotiating with an investor to purchase the majority shares in the Company (hereinafter referred to as 'the Transaction')," said the company.
Following the completion of this transaction, the investor plans to extend a mandatory offer to the remaining minority shareholders.
RioZim's financial struggles have been compounded by significant operational challenges at its three mines: Dalny Mine, Cam and Motor Mine, and Renco Mine, with the latter serving as the company's flagship asset.
Since 2020, these operations have faced numerous difficulties, including maintenance issues, plant breakdowns, and challenges related to heavy rainfall.
The focus has shifted more towards maintenance rather than production and replacement.
At Renco, the flagship mine, the company has encountered low ore grades, frequent breakdowns, and labor strikes, while both Cam and Motor Mine and Express Refinery in Kadoma have been under extended care and maintenance.
Consequently, RioZim's overall gold production has suffered, declining by 27% from 417 kg in the same period in 2023.
Cam and Motor Mine's gold production plummeted by 42%, falling to 130 kg in the first half of 2024. This outcome was particularly disappointing given the record-high gold prices in 2024, which were driven by global uncertainty and geopolitical tensions, notably in the Middle East.
Historically, RioZim has faced financial difficulties, necessitating a government bailout in 2016.
At that time, the company divested 34 million in bad debt to Zimbabwe′s Asset Management Corporation (ZAMCO), a government entity established to absorb the liabilities of struggling companies .
In 2020, GEM RioZim Investments, the company′s majority owner, sought to convert 11 million in shareholder loans into equity, a move that faced opposition from Old Mutual, then the second-largest shareholder.
Labor disputes have also plagued the company, with the Zimbabwe Diamond and Allied Minerals Workers' Union (ZDAMWU) appealing for corporate rescue in 2022 after workers went for months without pay.
The situation was further complicated by the tragic passing of GEM RioZim's owner, Indian billionaire Harpal Randhawa, in a plane crash in 2023, leaving the company's leadership and direction in a state of uncertainty.
Despite these ongoing challenges, RioZim's negotiations with a potential lender are anticipated to pave the way for a resolution of its financial difficulties, potentially bringing much-needed stability back to the company.
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