Oliver Kazunga, Senior Business Reporter
LISTED resource group, RioZim, says its gold output for the half-year ended June 30, 2019 dropped by eight percent to 962 kilogrammes due to rising procurement costs and downtime as a result of continued power cuts. In the comparable period last year RioZim produced 1 050kg.
“Local market prices have persistently tracked the movement of exchange rates in the parallel markets, which are, significantly higher than the interbank rate.
“Additionally, incessant power cuts, which commenced in the second quarter of the year significantly affected production. As a direct result of these power cuts, the group, recorded a decrease in its production by eight percent to 962kgs from 1 050kgs achieved in the comparative period in 2018,” said the mining group in a statement accompanying its financial results for the period under review.
The diversified mining group, which among others operates Cam & Motor, Dalny, and Renco mines, said release of its financial results were delayed due to changes to the reporting currency.
Cam & Motor Mine achieved 489kgs of the yellow metal, which was a seven percent growth from 458kgs produced in the same period in 2018.
The mine performance was at the back of processing of pure oxide ores with good grades and higher recoveries.
At Dalny Mine, the operation experienced acute power shortage in the second quarter of the year and the situation worsened in June with the mine only afforded four to six hours of plant running time per day.
“Resultantly, despite the mine successfully opening new higher grade and higher-grade recovery mining areas, production regressed by seven percent to 215kgs from 232kgs recorded in the same period in 2018,” said RioZim.
In the quarter under review, Renco experienced some plant breakdowns, which reduced production processing time.
“In addition, the incessant power cuts in the second quarter of 2019 had a negative impact on gold output.
“The mine, therefore, produced 259kgs which is only 72 percent of comparative period production of 360kgs,” said RioZim.
The company’s working capital, maintenance and expansion capital expenditure was also being drained because RioZim was procuring everything in United States dollars.
“In the absence of either being allowed to retain and use 100 percent of its export proceeds or raise and use US dollar from shareholders, the company’s position will continue to be extremely challenging,” it said.
During the period under review, RioZim posted a profit after tax of $38 million despite the challenging macro-economic environment. Revenue came in at $136 million while basic earnings per share stood at 31,42 cents. Assets grew to $1 billion.
Comparative prior year figures were, however, in United States dollars making comparison with the reported Zimbabwe dollar earnings distorted. The period under review witnessed several policy pronouncements that had a knock-on effect on businesses across sectors and RioZim was not spared.
However, the group indicated that some of the policies enabled RioZim to get a slightly better realisation of the value of its export proceeds at close to market price. Some of the key policy pronouncements include the liberalisation of the exchange rate, introduction of local currency as well as abolishment of use of the multi-currency system. – @okazunga.