Shareholders pump $19 billion into troubled RioZim
RioZim Limited shareholders injected $19 billion to prop up the struggling resource group, which last week announced sweeping writedowns for the half-year period through June 30, 2022.
Production at the group’s flagship gold interest listed on the Zimbabwe Stock Exchange fell 30% as the Murowa diamond operation suspended production to switch to processing low-grade stored landfills.
At Murowa, production for the period fell 52% from a year earlier, according to chairman Saleem Rashid BeebeeJaun, who raised the red flag on the group’s going concern status.
The Dalny mine slipped into care and maintenance and its shafts were subsequently flooded.
Output at the Renco mine fell 37% as industrial action jolted production, compounded by power outages.
The Dalny mine saw production fall by 92% during the period and was placed on watch after a six-month review period.
One Step Mine has also suspended operations highlighting a turbulent period that has seen Empress Metal Refinery continue to undergo care and maintenance.
A BIOX plant, which was commissioned during the period, suffered from “start-up problems”, according to general affairs manager Wilson Gwatiringa.
The group’s losses worsened to $5.4 billion from $2.6 billion in the comparable period in 2021, as RioZim’s working capital shortfall hit $13 billion.
In an angry reaction to NewsDay Business’ report on writedowns last week, Gwatiringa revealed that shareholders were reaching deeper into their pockets to pay key liabilities, including salaries, “aware of its responsibilities to the economy and the country”.
At the same time, he argued, “The company is not in financial difficulty as the article seeks to suggest.”
“The company’s major shareholders continue to invest money whenever necessary,” Gwatiringa said.
“Major shareholders remain ready and willing to support the company as the need for financial support arises.
“Shareholders have contributed money over the years, as it should, and there is a current shareholder loan balance of $19 billion on the company’s books. Funds from the major shareholder have been essential in ensuring that the company reorganizes, continues to operate and pays salaries while BIOX stabilizes. The group continues to receive substantial financial support from its major shareholder through shareholder loans to stabilize working capital,” he said.
Gwatiringa described the NewsDay report as “a jumble of misrepresentations, misunderstandings, misdirections and misunderstandings.”
He did not say what was misrepresented by the report, which was based on the resource company’s financial results released last week.
BeebeeJaun had said that the going concern status of the business was at risk.
“As of the closing date, the group’s current liabilities exceeded current assets by $13.1 billion,” Saleem Rashid said, noting that figure was $2.7 billion just six months older. early.
“The group reported a net loss for the period of $5.4 billion (June 2021 $1.5 billion). Group gold production for the period was subdued as operations were significantly impacted by the suspension of operations at Dalny Mine and One Step, which negatively affected production volumes at Dalny and Cam & Motor Mine respectively,” did he declare.
“These factors generally indicate that there is material uncertainty about the group’s ability to continue as a going concern and that it may be unable to realize its assets and discharge its liabilities in the normal course of business,” he said. noted the boss of RioZim.
Gwatiringa, however, insisted the business was not under threat.
“Of the current liabilities appearing in the financial statements, approximately $9.7 billion were funded by shareholders and therefore pose no threat to the business,” he said.
“The liability of $22 billion must therefore be considered without the $9.7 billion due to shareholders. The company is not in financial difficulty as the article seeks to suggest. The company remains optimistic about a positive turnaround given the steps it has taken to stabilize and improve its operations. »
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