Low gold production weighs downwn Rio Zim

LISTED mining group, RioZim posted a loss of $77,4 million during the half year period ended June 2020 from a profit of $38,2 million prior year weighed down by low gold production and rising costs of production, the company’s financials reveal.

The group recorded low production volumes of gold which plunged to 586kg compared to the 962kg achieved in the comparative prior period.

The low volumes were attributed to, among other challenges, acute power cuts which resulted in depressed milling throughput, persistent mill breakdowns and lower grade ore from One Step Mine.

Resultantly, the group’s revenue was subdued at $616,4 million.

The low volumes were, however, partly offset by the favourable gold price which averaged US$1,713/oz; an increase of 27% from US$1,346/ oz realised in the same prior period.

“The combined effect of low production attainment coupled with rising production costs, however, weighed down the company’s performance closing the period with a loss of $77,4 million, a decline compared to a profit of $38,2 million realised in the same prior period,” said the company’s chairman Saleem

Rashid Beebeejaun in a statement accompanying the results.

The group’s Renco Mine produced 288kg, an 11% increase from the 259kg achieved in H1 2019.

The increase in production is mainly attributable to improved plant availability as the plant breakdowns experienced in the comparative period were resolved.

Cam and Motor Mine produced a total of 199kg compared to 489kg recorded in the prior period.

Plant and machinery breakdowns negatively impacted throughput and gold output.

“To address the equipment challenges, the company is in the process of implement various capacitation activities which include repairs, rehabilitation and replacement of components to enable the plant to achieve installed capacity. The future of the mine remains hinged on the completion of the BIOX project in order to access higher grade ore at the Cam pits than is currently being processed from One Step Mine,” he said.

The company said the BIOX plant project was brought to a complete halt due to COVID-19 as all of the equipment manufacturers in South Africa and local contractors stopped operations in compliance with lockdown regulations. Funding initiatives that were being pursued by the group were dampened as financiers took a conservative approach in the face of low visibility and an uncertain future because of the pandemic.

The group’s Dalny Mine produced 99kg during the period under review, which is lower than the 215kg attained in the prior period.

There were significant equipment challenges experienced in both the mining and plant processing sections of the mine which are being rectified.

Power supply challenges experienced during the period also hampered production performance.

“Empress Nickel Refinery (ENR) remained under care and maintenance during the review period. In the first quarter ENR focused on furnace relining and accumulating feed material for matte production.”

The group’s Murowa Diamonds produced 250kcts compared to 390kcts in the comparative prior period.

As a result, the group posted a loss of $5,3 million. The decline in production was due to a decrease in the ore grade as the mine extracted ore from a lower grade pit.

Given the decrease in ore grade, the company is working on expanding processing capacity to shift the operations to a low grade, high volume model.

This project has stalled due to insufficient foreign currency and unavailability of funding to fast track the completion of the project.