RioZim's future in doubt amid financial woes

By Nyashadzashe Ndoro

Chief Reporter

Zimbabwe Stock Exchange listed mining giant RioZim Limited's ability to continue as a going concern has been cast into doubt due to significant financial challenges, according to the company's latest interim financial report.

As of June 30, 2024, the group's current liabilities exceed current assets by ZWG 1.040 billion, while total liabilities surpassed total assets by ZWG 149.2 million.

The company reported a net loss of ZWG 185.7 million for the six-month period, exacerbating accumulated losses to ZWG 478.1 million. These developments have raised concerns about RioZim's sustainability.

Auditors Forvis Mazars have drawn attention to the material uncertainty, citing the need for close monitoring.

"As stated in note 21, these conditions, along with the other matters as set forth in the note, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. Our review conclusion is not qualified in respect of this matter," the auditors noted.

Key factors contributing to the uncertainty according to the company, include, volatile exchange rates driving up production costs, lower gold production (27% decline to 306kg), decreased revenue (20% decline to ZWG 282.5 million) and challenges at Cam & Motor and Renco mines.

"The low production was attributed mainly to Cam & Motor Mine operating sub optimally due to low plant throughput and depressed recoveries. These were brought about by mining and ore supply challenges to the plant due to lagging pit development. Renco also recorded lower gold production due to inconsistent plant performance," the company noted.

"The gold price averaged US$2 165/uz which was 13% in the positive from US$1 910/og recorded in the comparative period. Revenue for the period was ZWG 282.5million, a 20% decline from ZWG 352.4million recorded in the same period in the prior year. The favourable gold prices to some extent cushioned the Group from the effects of lower production."

On RioZim's diamond business, the production for the period at the company's associate RZM Murowa (Private) Limited marginally increased by 2% to 216 000 carats compared to 212.000 carats recorded in the comparative period in 2023.

"The increase in production was a result of improvement in the grades from the stock piles which the mine is currently processing," the company noted.

"Mining activities from the pits remained suspended during the period. The mine is currently engaged in extensive exploration activities targeted at extending the life of its pits which will pave way for the resumption of mining activities in the pits. Despite an increase in diamond production, Murowa recorded a decline in revenue and profitability due to a continued decline in diamond prices. Consequently, the share of profit from the associate declined to ZWG 5,6 million from ZWG 12.8million recorded in the comparative period."

Meanwhile, RioZim Limited has appointed Srilatha Cherukuri as a Non-Executive Director, effective August 1, 2024. Ms. Cherukuri brings 28 years of experience in finance and audit, having worked with reputable companies such as Deloitte, RPG Group, and Tata Projects Limited.

Cherukuri's expertise spans various domains, including audit, retail, infrastructure, and commercial real estate. She has served on several boards and currently works as an independent consultant.

The company also announced the resignation of two senior officials: Grant Robert Flanagan, Non-Executive Director, effective July 31, 2024, Tawanda Chiurayi, General Counsel and Company Secretary, effective June 28, 2024.

The Board, Management, and Staff of RioZim Limited expressed gratitude to the outgoing members for their contributions to the Group.

This development comes as RioZim Limited is navigating financial challenges, having reported a net loss and facing concerns over its ability to continue as a going concern.