By Mining Reporter – Tuesday 12 November 2019
HARARE (Mining Index) – RIOZIM is reeling from the erratic power supply in the country, which resulted in the company recording an 8% decline in production.
In an interim report for the half-year ended 30 June 2019, RIOZIM said production declined to 962kgs.
“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 8% to 962kgs from 1 050kgs achieved in the comparative period in 2018,” read the report
Group performance Revenue for the period under consideration stood at ZWL$136.7 million. This low revenue achievement is mainly attributable to the decrease in gold production associated with the incessant power cuts experienced during the period under review. The gold price however firmed up to an average of USD1 346/oz against USD1 298/oz recorded in the same comparative period in 2018, and this, provided a cushion on the lower production volumes. The Company also benefited from the combined effect of lower costs in USD terms for its very limited Zimbabwean Dollar denominated costs, which resulted in the Group recording an operating profit of ZWL$ 46.9 million.
The Group closed the period with a net profit of ZWL$ 38.2 million. It is to be noted, however, that a substantial amount of the Company’s costs is being converted back into USD terms and, therefore, it is expected that there will be future pressure on the bottom line of the Group with costs increasing.
Cam and Motor Mine achieved 489kgs, a 7% growth from 458kgs achieved in the same period in 2018. This performance was at the back of processing of pure oxide ores with good grades and higher recoveries. To guarantee continuity of oxides whilst the Mine is in the process of constructing its Biological Oxidation (BIOX) plant to treat refractory ore, the Mine will source ore from the Group’s One Step Mine which is within the proximity of the current Cam and Motor mine processing plant. Preparations for mining and trucking of ore from One Step were at an advanced stage as at close of period and mining has commenced in the third quarter of 2019. The company noted it needs to raise USD to continue and complete the BIOX plant. Assistance continues to be arranged by our principal shareholder but that is not sustainable.
Dalny Mine experienced acute power cuts in the second quarter of the year. This worsened during the month of June with the Mine only afforded an average of 4-6 hours of plant running time per day. Resultantly, despite the mine successfully opening new higher grade and higher recovery mining areas, production regressed by 7% to 215kgs from 232kgs recorded in the same period in 2018.
Renco Mine 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% of comparative period production of 360kgs. Base Metals business The Empress Nickel Refinery (ENR) remained under care and maintenance. ENR processed reverts into matte during the period so as to generate revenue to meet care and maintenance costs as well as continue preserving the integrity of the plant.
RIOZIM said Engagements are continuing with various stakeholders for potential raw material offtake that can be effectively beneficiated at the Refinery and these are at differing levels and stages of negotiation.
On the diamonds front, Murowa Diamonds (Private) Limited achieved a 16% growth in production to 390,000 carats from 343,000 carats produced in the comparative period in 2018. Consequently, the share of profit from Associate also grew to ZWL$ 12.8 million.
On the firm’s Chrome business the Company remained seized with legal battles relating to some of its chrome claims in the Darwendale area, and the matter is still within the courts. Once the court processes are concluded, the Company said it remains committed to its plan of resumption of mining operations on its chrome claims after due consideration of chrome prices.
RIOZIM said it continues to vigorously pursue its power projects pipeline to guarantee stable power supply not only to its operations but also to assist in improving the electricity deficit in the country. The two major projects are the 178MW solar project and the Sengwa thermal power station. An Engineering Procurement and Construction (EPC) partner with the requisite expertise and experience to undertake the solar project has been secured and memorandums of understanding between the parties have already been concluded. The design work and grid impact assessment for the project has also been concluded.
Implementation of the project is expected once negotiations relating to the financing structure are finalised. The 2 800 MW Sengwa Power Station entails the development of a coal mine, power station, water pipeline and power transmission lines to the national grid. ENDS//