OUTPUT at RioZim’s gem extraction associate Murowa Diamonds slipped to 579 000 carats during the year ended December 31, 2020 after Zimbabwe’s oldest operating diamond mining asset depleted high grade gems in 2019, the listed giant said on Friday, spelling out an exploration strategy to sustain production.
RioZim, the multi-resource operation quoted on the Zimbabwe Stock Exchange, had produced 685 000 carats in 2019, according to chairman Saleem Rashid Beebeejaun.
But it was a tough year for RioZim, which saw gold output at its three mines tumble 27% after breakdowns at the flagship Cam & Motor operation and troubles at the ageing Dalny Mine pulled back operations.
Output at Dalny Mine plummeted by 46% to 198kg after its milling section was crippled by downtime. But Murowa’s huge influence within the RioZim empire was quite significant during the period, pushing its contribution to profits to $495 million, from $22 million previously.
Much of this push was underpinned by hyperinflation in Zimbabwe, where regulators have directed firms to apply hyperinflationary accounting standards to help investors make out what’s coming out of companies.
“The group’s associate, RZM Murowa Private Limited, produced 579 000 carats from 685 000 carats produced in the comparative period,” Beebeejaun said in a commentary to the financial statements.
“The lower production in the current year is attributable predominantly to the processing of the low grade K2 resources after the high grade K1 (kimberlite) resources had been depleted in the prior year.
“The associate continued to contribute positively to the group’s profitability with a share of profit of $494,8 million compared to $22,9 million in the prior year.
“The company will build on its exploration drive from the prior year in order to upgrade and increase confidence levels on all resources across all our mines in light of the declining grades at Renco, One Step and Dalny mines.”
RioZim bounced back to profit after overturning a $581,4 million loss in 2019 and made a profit after tax of $452,73 million, which was underpinned by firming gold prices on the international markets.
Gold prices averaged US$1 765 per once (oz) during the review period, which was 27% higher than 2019’s US$1 395/oz.
Revenues increased to $3,1 billion in 2020 from $577 million in 2019.
“The company’s gold production declined by 27% from 1,66 tonnes achieved in the prior year to 1,21 tonnes. Throughout the current year, the group’s flagship operation Cam & Motor Mine carried out mining activities from the nearby One Step Mine hauling low grade ore to the Cam & Motor plant for processing,” Beebeejaun said.
“This resulted in a drastic fall in gold production compared to the prior year when the mine processed higher-grade ore from its Cam pits. The gold price maintained a growth trend throughout the year recording a 27% growth from the prior year’s average price of US$1 395/oz, to an average price of US$1 765/oz in the current year which counteracted the impact of lower production volumes.” Newsday