HARARE, May 21 (The Source) – Resources group, RioZim’s bid to raise $10 million through a rights offer got a shot in the arm after it received exchange control approval from the Reserve Bank of Zimbabwe for major shareholder GEM RioZim Investments Limited to underwrite the issue, the company said on Thursday.
GEM RioZim Investments is a unit of Harpal Randhawa’s Global Emerging Markets Limited, a $4 billion private equity and venture capital fund specializing in mezzanine, growth capital, buyout, and recapitalization investments.
It seeks to invest in early venture, middle market, mature, special situations, late stage, late venture, and expansion investments. GEM rode to RioZim’s rescue in 2012 as the miner grappled with a $50 million debt.
The offer will now open on June 8 and close on June 26, as the group seeks to raise cash for its turnaround strategy.
RioZim directors proposed the rights offer in January this year to reopen the historic Cam and Motor gold mine, now viewed as key to the group’s revival. The mine was a cash cow until it was shut down nearly 50 years ago, having produced 150 tonnes of gold in its entire life until its closure in 1968.
The group had also sought approval of the offer from the mines and indigenisation ministries, but has since ascertained that the underwriting of the rights issue and the transaction itself do not require their approval.
“In light thereof, given the company’s current financial situation and its need for the immediate implementation of the Cam & Motor Gold Mining Project, Gem RioZim Investments Limited, as the underwriter to the transaction, has waived the said second condition precedent (approval from the ministries of indigenisation and mines),” RioZim said in a statement to the Zimbabwe Stock Exchange.
“Similarly the company having ascertained that the second condition precedent is not legally required for approval of a rights issue, nor for underwriting of the transaction, from the relevant ministries responsible for assessing indigenisation plans for the mining sector, also hereby waives the said condition precedent.”
GEM already holds a 24.97 percent stake in RioZim and injected $700,000 for resumption of mining activities at Cam & Motor ahead of the rights offer.
Chief executive officer Noah Matimba told Parliament on March 4 that open pit mining operations at the Mine had started in March and projected a production of 4,000 ounces per month in the second half of the year.
Cash from the rights offer will be used to buy equipment which is being designed and manufactured in China.
RioZim reported in March that losses had widened to $18,5 million for the full year to December, from $4,7 million in the prior year driven by falling international gold prices and high cost of borrowings.