- May 19, 2020
- Posted in LOCAL
LISTED diversified mining concern, RioZim has recorded a 41 percent decline in gold production in the first quarter ended March 31, 2020, from its local operations on the back of erratic power supplies.
In a trading update for the period under review, RioZim said: “Power supply continued to be erratic during the quarter, which negatively impacted volumes across the company’s operations.
“This was, however, abated towards the end of the quarter as power supply improved. As a result of erratic power supplies, the company’s gold production fell by 41 percent compared to the same quarter in 2019.”
The gold price was, however, favourable averaging US$1,562 per ounce, which was 17 percent above the average price for the same period last year of US$1,336/oz, said the company.
For gold, the diversified resource group owns Cam and Motor, Dalny and Renco mines while for other minerals, RioZim operates Empress Nickel Mine.
At Cam and Motor Mine, it said mining activities were all concentrated at One Step Mine during the quarter with the company hauling ore to the Cam and Motor plant.
The ore resources at One Step are of significantly lower grades compared to the Cam ore resources.
“The effect of processing the low-grade ores resulted in production dropping by 62 percent compared to the first quarter of 2019 when production was from higher grade Cam resources,” it said.
During the quarter under review, the mining group said progress on the US$17 million Biological Oxidation (BIOX) project presently under development was significantly hampered by acute funding challenges.
“Foreign currency availability remains a stumbling block to the timeous commissioning of the project.
“The company is however in discussions with various stakeholders for possible funding of the project.
“In the meantime, every effort will be made to ensure that the project gets completed,” said RioZim.
Upon completion, it is hoped the BIOX plant would go a long way in ensuring the group beneficiates its precious minerals by processing pure oxide ores to make good grades and high recoveries, which in turn would generate more foreign currency when exported.
At Danly Mine production was erratic for the greater part of the quarter with supplies only improving towards the end of the quarter. Consequently, output fell by 52 percent compared to the same period in 2019.
“Renco recorded a nine percent growth in production volumes compared to the first quarter of 2019.
“The growth in production was attributable to improved plant availability and reduced load shedding during the quarter.”
On the base metal business, the mining group said the Empress Nickel Refinery (ENR) remained under care and maintenance throughout the quarter.
On the diamond operation, it said production at the group’s associate Murowa Diamonds (Private) Limited was subdued at 61 percent of first-quarter 2019 production.
“The lower volumes were attributed to the inconsistent power supply during the period. There have been no significant disruptions to production as a result of the Covid-19 pandemic across the group.
“However, the threat to the group’s raw material supply chain, which is predominantly imports, remains a key business risk as stringent cross border controls continue to be enforced in various countries.”
The group predicts that metal price volatility may also have a negative impact on its going concern into the future as commodity markets continue to suffer despite the gold price remaining stable and showing a positive upward trend since the outbreak of the pandemic.
The company said its operations remain significantly exposed to the negative impacts of Covid-19.
“The future therefore remains highly uncertain and the full impact is currently impractical to quantify in monetary value terms.”
On the outlook, RioZim said the challenging operating environment coupled with the impact of Covid-19 continues to put pressure on the group in the second quarter.
“The company, however, continues to mitigate the effects of these problems as best as possible to remain viable in the midst of these challenges.
“Engagements with the Central Bank will continue for an upward review of the company’s foreign currency retention for the company to meet its operational requirements and successfully deliver its BIOX plant in the set timelines,” said the company.