RioZim forecasts further losses in FY14

RioZim forecasts further losses in FY14
Published: 17 February 2015
RioZim Limited says it expects to report a bigger loss for the full year to December due to lower tonnage at its Renco Mine combined with the low gold prices in the fourth quarter of last year.

In a statement, the company said production at Renco Mine decreased marginally by 0.5 percent as a result of lower than anticipated tonnages and ore grade.

"In addition the mine's performance was adversely affected by the continued weakening of gold prices especially in the fourth quarter of the year. However, from October 2014 the effect of declining gold prices was partially neutralized by a welcome reduction in the gold royalty levy from 7 percent to 5 percent," the company said.

Despite the lower output, the group's annual production increased by 6 percent from the prior year.

RioZim also said the matte supply at Empress Nickel Refinery (ENR) was erratic and in short supply following a scheduled maintenance shut down by the company's sole supplier of matte thereby seriously constraining the group's performance for the second half of the year.

This resulted in only 30 percent of the annual contractual matte supplies being received and the Refinery operating at 25 percent capacity.

"Against this background the group expects to report an increased operating loss for the financial year ended 31 December 2014 over the loss that was reported in June 2014. The net loss position of the Group will be further worsened by finance charges incurred on the Group's exposure," the firm said.

The group posted an after tax loss of $7,4 million with revenue down 39 percent to $39,3 million for the six months to June.

RioZim's full year results will be published on the 27th of March 2015. The company said it is engaged in initiatives that will mitigate the concentration risk of dependence on one matte supplier but the engagements are only likely to start yielding results in the second half of this year.

The firm is seeking to raise $10 million through a rights offer to reopen the Cam and Motoring gold mine near Kadoma.
- BH24
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