Low grade stockpiles dent Murowa Q1 performance
RIOZIM Limited says its diamond business RZM Murowa (Private) Limited, suffered from low grade stock piles during the first quarter of 2022 hence the group has forecast the expansion project to sustain production.
As part of a broader expansion programme, RZM Murowa, last year announced that it intends to commission a processing plant at the diamond mine, located in Mazvihwa, south central Zimbabwe, which is expected to double its production capacity.
The firm indicated that the project is expected to increase its output from 190,000 tonnes of ore per month, to 500,000 tonnes and will see operations transition from open cast to underground mining.
The group announced last year that it would invest over US$450 million into the expansion of operations, with the current phase of the expansion programme expected to cost US$62 million, extending operations at the Murowa Mine by four years.
According to the group's trading update for the quarter under review, RZM Murowa recorded a 49 percent decrease in production compared to the same period in the prior year due to processing low grade stock piles throughout the period.
“The Associate's expansion project to upgrade the processing capacity of the plant is progressing well and is forecast for commissioning in the current financial year.
“The new plant will enable processing of high volume throughput at lower grades to sustain production,” said the group in a statement.
The Global Diamond Industry 2021-22" market is expected to be strong through the first half of 2022. The industry's production is expected to hit 120 plus million carats in 2022 but is unlikely to reach pre-pandemic levels within the next five years.
Apart from the diamond operation, RioZim's flagship business is gold mining. The group also has a power project, the 2 800 MW Sengwa Power Station.
The group noted that despite the challenging operating environment in the quarter under review, it remains optimistic about improving its fortunes through increased production from its multimillion dollar BIOX Plant, which was commissioned subsequent to period end.
“The testing phase of the plant during the period produced positive results and the Group is confident of scaling up production from Q2 2022,” it said.
It said at Cam & Motor, the mine focused on the completion and testing of its Biological Oxidation (BIOX) Plant to bring it to commissioning stage.
“As a result, the mine suspended mining activities from its nearby OneStep Mine to pave way for resumption of production from the Cam & Motor pits.”
The BIOX plant was successfully commissioned subsequent to period end on the 14th of April 2022.
Gold production for the quarter was subdued at 34 percent below the same period in the prior year due to the testing of the BIOX Plant.
At Dalny Mine, there was no gold production throughout the period after the mine suffered from poor ground conditions and flooding of its pits which rendered mining activities insurmountable.
RioZim said the mine is scheduled to resume operations in the second quarter after dewatering of the pits.
At Renco Mine, power supply challenges persisted throughout the quarter, which resulted in reduced plant throughput.
“Consequently, gold production declined by 21 percent compared to the same period in the prior year.”
The group noted that rehabilitation of the power infrastructure of the mine being carried out by ZETDC is progressing well despite delays due to logistical and insufficient resources.
Meanwhile, the Empress Nickel Refinery (ENR) remained under care and maintenance throughout the quarter.
In terms of the operating environment, the group indicated that the inflationary environment persisted through the period as prices of local inputs continued to soar right from the beginning of the year.
It said this was exacerbated by a marked depreciation of the local currency throughout the quarter, making local inputs uneconomic and increasing demand for foreign currency as businesses leveraged on imports of raw materials to minimise increasing costs.