RioZim posts $18 mln FY14 loss on high cost of debt

RioZim posts $18 mln FY14 loss on high cost of debt

HARARE, March 31 (The Source) – Resources group, RioZim’s full year loss widened to  $18,5 million for the period to December, from $4,7 million last year driven by falling international gold prices and high cost of borrowings.

Chairman, Lovemore Chihota said the year 2014 was “another very difficult year for the group,” as its sole supplier of raw material for Empress Nickel Refinery (ENR) had supplied less than one third of their contractual commitment.

“Despite the under supply of matte, ENR was kept running in order to partly absorb overheads costs and to retain skills. This cost the group large losses,” he said in a statement accompanying the results on Tuesday.

In addition, he said, gold prices continued to slide downwards and interest on bank debt cost the group more than $9,4 million.

Revenue declined by 38 percent, resulting in an operating loss of $11 million against the prior year’s operating profit of $2,1million.

During the year under review, ENR received less than 30 percent of its annual contracted matte supplies and operated at less than 25 percent capacity which resulted in substantial operating losses.

“The sole supplier of matte faced a series of challenges with their plant and declared a number of force majeures which resulted in erratic and inadequate matte supplies to the Refinery,” read the report.

The company said discussions were underway with local suppliers of matte which will result in the refinery beneficiating matte from the local mineral resources but the initiative is expected to bear fruit between the fourth quarter of 2015 and the second quarter of 2016.

Base metals production decreased by 52 percent to 2,915 tonnes compared to  6,114 tonnes achieved in 2013 resulting in revenue dropping by 49 percent  to $40 million from last year’s $78,7million.

Gold production at Renco increased by six percent to 648 kg in 2014 due to improved ore milled and plant recoveries.

However, the increased production was neutralised by the weakening gold price resulting in a decrease in revenue of percent to  $25,9 million.

“This operation lost significant amounts of gold production following unprecedented storms that were experienced in the Masvingo area in the first quarter which resulted in the mine flooding,” said RioZim.

The group’s associate, Murowa Diamonds (Private) Limited’s performance was also affected by low productivity and prices resulting in lower profitability compared to last year.

Going forward,  the group said it had lined up strategic initiatives which if successfully implemented will turn around its fortunes such as  the re-opening of the Cam & Motor mine and management of the concentration risk of depending on one supplier of matte for the refinery.