RioZim announces first profit since dollarisation

RioZim announces first profit since dollarisation

HARARE, March 30 (The Source) – Resources group RioZim reported a net profit for the first time since dollarisation, of $2,5 million in the full year to December 31, 2016 from  $8,8 million loss in the preceding year on increased revenue and cost containment measures.

“Despite the challenging and uncertain operating environment, the Group managed to increase its revenue by 15 percent whilst cutting administration costs by 24 percent. Together, these developments have reshaped the Group, providing a strong foundation for future growth,” chairman Lovemore Chihota said on Thursday.

The Group’s revenue grew by 15 percent from $56,5 million in the preceding year to $65,2million, despite Empress Nickel Refinery (“ENR”) remaining under care and maintenance.

Gross profit increased from $14,4 million recorded in the previous year to $21,3 million on increased revenue.

Operating profit of $7,5million was achieved in the period from an operating loss of $150,000 previously.

Total asset valuation increased by 10 percent from $112,4 million recorded in the previous year to $123,8 million.

Chihota said the group benefited from the debt restructuring carried out in 2016, under which RioZim sold its $34 million debt to the Zimbabwe Asset Management Corporation (Zamco). The deal resulted in net finance costs reducing by 20 percent from $6,7 million in the previous year  to $5,4million.

Chihota said Cam & Motor’s gold output almost doubled in 2016, to 856 kilogramme from 450kg in the prior year.

However, Renco Mine experienced a 4 percent decrease in gold output to 712kg from 749kg in 2015 owing to the mine’s complex ore body.

Chihota said the group’s associate, Murowa Diamonds (Private) Limited is recovering on the back of a number of initiatives implemented in 2016 which include the rolling out of a new mining plan, doubling the plant’s processing capacity and more investment.

RioZim’s share of the loss in the associate dropped sharply from $2,2 million in the preceding year to $267,000.

ENR remained under care and maintenance due to the unavailability of matte supplies from its sole supplier. The supplier was placed under provisional liquidation during the year, but the group is working on securing alternative matte supplies both locally and regionally.

Owing to depressed chrome prices coupled with high power tariffs, the chrome project remained on hold throughout the year as its feasibility remains uncertain, Chihota added.

Going forward, Chihota said with the commissioning of the Cam & Motor gold processing plant, the company intends to increase operational efficiencies through the optimisation of the plant. Additionally RioZim intends to increase production and gold recoveries through the installation of a flotation circuit to the plant in the second quarter of 2017.

However Chihota said the prevailing foreign currency shortages  and the inability to process all external payments pose a threat to the procurement of adequate supplies from external suppliers.