RESOURCES group RioZim says it is making frantic efforts to shore up its balance sheet and stay afloat after its liabilities outstripped assets, thereby threatening its going concern status.
BERNARD MPOFU
RioZim has been in the red at a time its gold mines have been recording depressed output.
Going concern is an accounting term for a company that has the resources needed to continue operating indefinitely until it provides evidence to the contrary. This term also refers to a company’s ability to make enough money to stay afloat or to avoid bankruptcy.
As at 30 June, RioZim’s current liabilities exceeded current assets by ZW$13.1 billion (December 2021: ZW$2.7 billion) and the group reported a net loss for the period of ZW$5.4 billion (June 2021 (ZW$1.5 billion).
The group’s gold production for the period was subdued as operations were significantly impacted by suspension of operations at Dalny Mine and One Step operations which negatively affected production volumes at Dalny and Cam & Motor Mine respectively.
Renco Mine’s production for the period fell by 37% to 174kg from 278kg achieved in the same period in prior year. The low gold production was, according to the company’s half-year financials for the period ending 30 June, a result of low milled tonnage arising from severe power challenges during the first quarter and lost production due to a month-long labour dispute in the second quarter.
RioZim says Dalny Mine suffered from unsustainable low grades from its pits which resulted in the mine suspending operations for the six-month period under review. A marginal 8kg of gold was produced for the period against 105kg produced in the comparative period when the mine was fully operational.
The mine’s underground shafts are currently flooded and will, according to the group, require an extensive de-watering exercise to bring them to mineable conditions.
“These factors ordinarily indicate the existence of a material uncertainty on the group’s ability to continue as a going concern and that it may be unable to realise its assets and discharge its liabilities in the normal course of business,” the group says.
“The group continues to receive substantial financial support from its major shareholders through shareholder loans to stabilise working capital… The directors believe that the group will continue to operate as a going concern and preparation of the financial statements on a going concern basis is still appropriate. This basis assumes that the realisation of assets and settlement of liabilities will occur in the ordinary course of business.”
After successful commissioning of the BIOX Plant in April 2022, the group is set to ramp up production at Cam & Motor mine in the second half of the year.
The expected increase in gold production volumes will take the group back to profitability and generating positive cashflows. RioZim also says it will carry out cost saving initiatives which will contribute positively to the group’s profitability.
“The group is forecast to install an additional ball mill at Renco in the short term which will increase the current plant processing capacity by 30%. The increased throughput will enable the mine to increase gold production volumes even at lower grades,” RioZim says.
