Delays in forex payments continue to choke RioZim operations

Author Name
Respect Gwenzi
Stock Market 6 months ago

Harare – The delays on the payment of RioZim’s gold receipts by the Reserve Bank of Zimbabwe (RBZ) is still persisting and has severely strained the working capital and cash flows of the Group and greatly hampered production, the Group said in the latest trading update released on Monday.

In a trading update for the three months ended 30 September 2020, the Group said it continues to engage the RBZ for a resolution of its delayed receipts.

“The Company is also pursuing various funding options for its BIOX project albeit in a difficult operating environment which has been compounded by the uncertainties brought about by the COVID-19 pandemic as lenders and financiers are taking a conservative approach on lending,” the Group said.

With the country grappling through acute foreign currency shortages, the Central Bank has been struggling to process payments to miners in due course. This prompted RioZim to take legal action against the RBZ in 2018.

RioZim, which operates three gold mines, a nickel refinery and holds minority shares in the Rio Tinto-run Murowa Diamonds, at that time said the RBZ had since 2016 only paid an average of 15 percent of sales in U.S. dollars, meaning the company was unable to import equipment and materials for capital projects, putting its operations in jeopardy.

The Company was quoted saying, “The situation is thus unsustainable and prohibits the Company’s ability to operate viably and maintain its production. In addition, the gold business requires access to foreign currency in order to fund very important sustaining capex projects.”

During the Q3 2020 period, the Group’s gold production contracted by 9% after recording significant production decline at Cam and Motor Mine.

Output at the Mine declined by 8% from prior comparative period as the Mine continued with processing low grade ores from its One Step Mine throughout the quarter.

The Group’s Dalny Mine also recorded a 37% decline in production in the period under review owing to multiple breakdowns from its ageing plant.

Of the Group’s three gold mines, only Renco Mine registered positive production which rose by 5% due to improved milling throughput.

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