Production constraints, Covid-19 weigh down RioZim

DIVERSIFIED mining group, RioZim has announced a 27 percent decline in gold production as some constraints at its linchpin Cam & Motor Mine affected 2020 output.

The group's gold production declined from 1,66 tonnes achieved in the prior year to 1,21 tonnes.

Of RioZim's three gold mines, only Renco posted positive production numbers in FY2020.

“Throughout the current year, the group's flagship operation Cam & Motor Mine carried out mining activities from the nearby One Step Mine hauling low grade ore to the Cam & Motor plant for processing.

“This resulted in a drastic fall in gold production compared to the prior year when the mine processed higher grade ore from its Cam pits,” said RioZim chairman Rashid Beebeejaun.

Production at Cam & Motor Mine for the period under review closed at 427kg, a sharp 42 percent decline compared to 738kg in the prior comparable period. Management said the depletion of oxide ore resources at the mine necessitated the migration of mining operations to the group's nearby One Step Mine.

RioZim is currently hauling ore from One Step Mine to the Cam & Motor processing plant.

“The ore resources at One Step Mine have significantly lower grades than those at the Cam & Motor pits and this negatively affected production output,” said the chairman.

“The mine is, however, focused on completion of its BIOX plant project which will enable the resumption of mining and processing of high grade refractory sulphide ores from the Cam pits.”

Gold output at Dalny Mine was also significantly lower, down by a hefty 46 percent in the current year to 198kg from the comparative period production of 364kg as the mine “suffered major breakdowns in the milling section of its ageing plant which directly impacted milled output.”

Dalny currently relies on near the surface open pitable ores which have lower grades that culminate in low production volumes.

According to management, the medium-to-long term plan for the mine is to complete the de-watering and resuscitation of its underground shafts in order to access the higher grade ore that is deposited underground.

With regards to the group's gold operations, Renco Mine was the only bright spot as the mine recorded aggregate gold output of 580kgs, which was 4 percent above the prior year's gold output of 556kgs.

The increased gold output was at the back of higher milling throughput, which was achieved as the mine implemented its ‘high volume low grade' strategy which yielded positive results. The overall depressed gold output was offset by firming gold prices during the year under review.

The gold price maintained a growth trend throughout the year recording a 27 percent growth from the prior year's average price of US$1 395/oz, to an average price of US$1 765/oz in the current year which counteracted the impact of lower production volumes.

As a result of the improved gold price and currency depreciation locally, RioZim's revenues totalled $3,1 billion in comparison to $577,1 million in the prior year.

Although the Covid-19 pandemic was not a factor in the group's mining operations, the pandemic affected progress on the BIOX plant project, with funding opportunities remaining clogged throughout the year.

“Progress on the BIOX project was negatively affected by the Covid-19 pandemic which brought the project to a standstill as key suppliers were affected by lockdowns and travel restrictions in the first half of the year.

“Project activities resumed in the second half of the year albeit at a slow pace after lockdown measures were eased.

Despite the relaxation of lockdown measures, the movement of goods and people remained constrained due to the various Covid-19 restrictions and protocols that remained in place both locally and in South Africa where most of the equipment suppliers are housed thereby limiting the smooth flow of project activities,” said Beebeejaun.

“External funding for the project remained elusive throughout the year as lenders took a conservative approach in light of the uncertainties brought about by the Covid-19 pandemic. This left the Company primarily dependent on internally generated funding.

“Despite the funding and Covid-19 challenges, the company managed to steam-roll the project to bring civil works to near completion and managed to take delivery of the bulk of the equipment by year end. Installations commenced post year end and are progressing well.”

RioZim added that as at the end of 2020, the company was engaged in discussions with potential lenders to secure the remaining funding requirements to complete the project, and is hopeful of reaching financial closure. Management expects the project to be commissioned in the current year.

The group's associate, Murowa (Pvt) Limited, produced 579 000 carats from 685 000 carats produced in the comparative period, largely attributable to the processing of the low grade K2 resources after the high grade K1 resources had been depleted in the prior year.

Murowa continued to contribute positively to the Group's profitability with a share of profit of $494,8 million compared to $22,9 million in the prior year.

The Empress Nickel Refinery remains under care and maintenance. RioZim's chrome claims in Darwendale are still under a legal dispute and we await finalisation of the court case.

Management said it continues to monitor the chrome prices with the aim of resumption of mining operations once the legal case has been finalised.

Going forward, the group is focused on the completion of the BIOX project

“The success of this project will be pivotal for the sustenance of the Cam & Motor mine,” said the chairman.

The board did not declare a dividend for the period. – www.ebusinessweekly.co.zw