Diversified miner, RioZim, has dismissed the proposition by a workers’ union to place the company under corporate rescue, a form of local bankruptcy protection, saying the company is not “financially distressed” and at any time, can pay its debts.
RioZim general counsel Tawanda Chiurayi wrote to the Zimbabwe Diamond and Allied Minerals Workers Union (ZDAMWU) RioZim, despite the recent placement of its key gold mine, Dalny under care and maintenance, other mining operations remained viable.
Earlier on, ZDAMWU secretary general Justice Chinhema, had threatened to apply for corporate rescue, arguing the ZSE-listed miner was in distress and struggling to pay workers.
Chinhema said, “any mine that fails to pay its workers or that fails to operate in terms of the law to the extent of affecting communities that survive through them will be inviting corporate rescue, which is meant to resurrect failing entities like RioZim.”
RioZim, however, said any suggestion of placing the company under corporate rescue was reckless.
“The company is not financially distressed and at any given time, has the capacity to pay its current debts as they become due and payable within the immediate ensuing six-month period,” Chiurayi said.
“Please note that all salaries payable in Zimbabwe dollars for the month of August 2022 have been fully paid to your members and other employees. The majority of the US dollar salaries have also been paid till August 2022.”
He said production within the group has in the third quarter of 2022 improved, compared to 2021 and the first half of 2022. The company has also implemented a plan that has seen chairs improved gold production at Cam and Motor, Renco and Murowa.
RioZim said the decision to place Dalny under care and maintenance, came after the mine posted heavy losses during the past 18 months. Dalny in the Chakari mining district near the town of Kadoma incurred a big loss of nearly US$8 million and produced only 3kg of gold during the first quarter of 2022.
In the six months to June 2022, about 8kg of gold was produced at the mine against 105kg produced during the same period last year when the mine was fully operational.
Placing the mine under care and maintenance was to avoid an overall “negative impact on the group’s overall performance”.
RioZim said Dalny Mine suffered from unsustainable low grades from its pits, which resulted in the mine suspending operations.
Its underground shafts are currently flooded and will require an extensive dewatering exercise to bring them to mineable conditions.
Chiurayi said RioZim was set to ramp up gold production at Cam & Motor in Kadoma after some challenges experienced during the early stages of commissioning the Biological Oxidation plant were resolved. RioZim invested US$50 million in Cam & Motor and commissioned a US$17 million BIOX to support this investment.
Biological oxidation is the latest technology that ensures better processing of gold ores with high sulphur content. Ores at Cam and Motor Gold Mine contain high sulphur
concentrations and increase cyanide consumption during the leaching process.
The technology uses bacteria to reduce sulphur content before cyanidation. The BIOX plant is one of the key projects expected to get the firm’s turnaround strategy back on track.
“The group invested US$50 million in order to commence and improve production to ensure the mine remained operational,” Chiurayi said.
“You will appreciate that while once the oxide ores ran out, the company had the option of closing Can and Motor and retrenching the workforce. Instead, it took a hard decision of building the BIOX plant so that there would be continued employment for your members and others as well, Chiurayi added.
“With this rather thoughtless action (calling for corporate rescue), you indeed rather jeopardised the future of the company and of the people whose people you profess to take care of. The company has been recently capitalised with the principal shareholder having brought in funds from outside Zimbabwe which has helped the company retool.
During the first half of the year, gold production declined by 30 percent to 393kg compared to 564kg achieved in the same period in the prior year.
The subdued production was mainly attributable to low output at Dalny during the periodcoupled with under capacity utilisation at Cam & Motor after discontinuance of the one step operation to pave way for the resumption of mining activities at the mine.