By Oliver Kazunga
Diversified resource group, RioZim Limited, has resumed the construction of a US$17 million Biological Oxidation (BIOX) plant at the firm’s Cam and Motor gold mining operation in Kadoma.
Construction of the BIOX plant will see the mining group beneficiate its precious minerals through processing pure oxide ores to make good grades and high recoveries and thus generating more foreign currency.
In a statement accompanying financial results for the year ended December 31, 2019, RioZim chairman Mr Saleem Beebeejaun said the construction project, which had been stalled by funding challenges, resumed in the fourth quarter of 2019.
“The company re-embarked on the US$17 million capital project to construct the BIOX plant at Cam and Motor during Q4 2019, which had been earlier stalled due to lack of funds.
“The use of the BIOX technology is expected to increase production by at least 50 percent,” he said.
Mr Beebeejaun said civil works for the project have progressed to 30 percent as at reporting date. Structural steel fabrications are in progress after deposit payments were made during the year.
“Mechanical installations phase is scheduled to start during second quarter of 2020. The BIOX plant was expected to be commissioned in the fourth quarter of 2020,” he said.
The RioZim boss said the commissioning timeline was, however, highly dependent on the company securing foreign currency, which remains the biggest risk threatening the project.
“The life of mineable resources at One Step to feed the Cam and Motor plant during the construction phase of the BIOX plant is around nine months, after which production at Cam and Motor will come to a complete halt if the BIOX plant is not commissioned within the set timelines,” he said.
“The company is, however, looking at ways to continue exploration activities at One Step Mine to extend the life of mineable resources and safeguard the going concern of the group.”
During the year under review, the group embarked on various capital raising initiatives to fund the completion of the BIOX Plant, which holds the future of Cam and Motor Mine.
“Among these initiatives include approaching the company’s bankers and other financial institutions and financiers both local and foreign for possible US dollar funding.
“Negotiations were at varying levels as at year end,” said Mr Beebeejaun.
As at reporting date, all the fund raising activities the group was pursuing were not yet binding and hence remain uncertain. The above was further complicated by the outbreak of Covid-19, which has forced lockdowns in South Africa and Zimbabwe. At its last Annual General Meeting, RioZim sought to increase authorised share capital in order to raise capital in US dollars.
“This resolution was opposed by Old Mutual. Since then the company has been working with Old Mutual to find a solution that would allow the company to raise capital in US dollars but has not been able to arrive at any conclusion due to Old Mutual’s inability to raise US dollars to fund the capital project and its probable hesitance to be diluted,” said Mr Beebeejaun.
In the financial year ended December 31, 2019, Cam and Motor achieved 738 kilogrammes of gold, which was three percent below the 2018 output of 759kg.
The low performance was attributed to persistent mill breakdowns during the year, which forces the mine to carry out major haul repairs including reworking the foundations of the mills in the second half of 2019.
Meanwhile, the group which also operates Dalny and Renco gold operations suffered a seven percent decline in output to 1 658kg against the prior year’s 1 792kg.
“The low production volumes were attributed to incessant power cuts of up to 18 hours per day, which hampered production at all the group’s mines from second quarter in 2019.
“In addition to the power cuts, the group also suffered from breakdowns on the mills section at its Cam and Motor plant,” said Mr Beebeejaun.
Consequently, revenue for the year under review was subdued at ZWL$577,1 million.
The group’s gross margin declined to two percent compared to 18 percent achieved in the prior year, which is reflective of the heavy premiums borne by the company.
This was as a result of the disparity between local component of the group’s revenue, which is received at interbank rate against prices of local inputs that are pegged alternative market rates. The Chronicle