RioZim’s gold mining operations largely depressed in the third quarter to September 30, 2020, prevailing high gold prices reduced, the negative impact of lower volumes of the business.
Two of the group’s key gold mines – the Cam & Motor and Dalny Mines – recorded a slowdown in output due to varying reasons.
RioZim reported that the Cam & Motor Mine continued with the processing of low-grade ores from its One Step Mine throughout the quarter.
As a result, the mine’s output declined by 8 percent from the same period last year when the mine produced from high-grade ores at its Cam pits.
The group, however, reported slow progress on the mine’s Biological Oxidation (BIOX) plant project due to funding challenges.
“Civil works and steel fabrications for the Biological Oxidation (BIOX) plant project progressed timidly during the quarter.
Delivery of structural and steel components from the project’s contractors in South Africa faced significant delays due to lack of foreign currency funding,” said RioZim.
“The company is also pursuing various funding options for its BIOX project albeit in a difficult operating environment, which has been compounded by the uncertainties brought about by the Covid-19 pandemic as lenders and financiers are taking a conservative approach on lending.”
The performance of the Dalny Mine was also weak, as the mine “suffered multiple breakdowns from its ageing plant, which negatively affected production throughput,” which saw production falling 37 percent compared to the same period last year.
The only positive performer in the gold segment was the Renco Mine, which exceeded its 2019 comparative period production by 5 percent owing to improved milling throughput.
“The mine benefited from its ‘high volume low grade’ strategy which was implemented throughout the quarter which resulted in increased gold production,” said RioZim.
Gold, which is viewed as a hedge against inflation and currency debasement, was range-bound between US$1 800 and US$1 900 during the period under review.
RioZim management said the positive impact of high gold price helped limit the effects of a 9 percent production decline, as well as rising costs during the quarter just ended.
“Due to the low production at Cam & Motor, the group’s gold production for the quarter trailed by 9 percent from the comparative period last year.
“The gold price maintained its upward trajectory averaging US$1 879 per ounce (oz) for the quarter, which was 29 percent above the average price of US$1 457/oz for the same period last year.
“This helped to partly absorb the negative impact of low production and increased costs during this period.”
Meanwhile, RioZim’s diamonds business – Murowa Diamonds – fared no better during the period under review.
The diamond business recorded a 2 percent decrease in production compared to the prior comparable period.
The group attributed the reduction in diamond production was attributable to processing ore from K1 pits which are of low grade while in the same period last year, the mine was processing from high-grade K2 pits.
The base metals segment, Empress Nickel Refinery (ENR), remained under care and maintenance.
Going forward, the group expects the business operating climate to improve on relaxed lockdown restrictions. Herald