Diversified resources group, RioZim Limited production performance for the year ended December 2019 declined by 7% to 1 658 kgs of gold against the prior year’s production of 1 792 kgs.
According to the group chairman Saleem Rashid Beebeejaun, the low production volumes were attributed to incessant power cuts of up to 18 hours per day, which hampered production at all of the Group’s mines from Q2 2019.
In addition to the power cuts, Beebeejaun said the group also suffered from breakdowns on the mills section at its Cam & Motor plant.
According to Beebeejaun, the group’s gross margin declined to 2% from 18% recorded during the prior year.
“Consequently, revenue for the year was subdued at ZWL$577.1 million.
“The Gold price was favourable throughout the period and averaged US$1 395/oz, 12% higher than an average price of US$1 247/oz recorded in prior year.
“This partly cushioned the Group’s reduced revenue due to lower production volumes.
“The Group’s gross margin declined to 2% compared to 18% achieved in the prior year which is reflective of the heavy premiums borne by the Company as a result of the disparity between the local component of the Group’s revenue which is received at interbank rate against prices of local inputs which are pegged at alternative market rates,” he said.
He added that in the long term, through its solar projects Rio Zim is expected to be fully independent of the power utility Zesa.
“Power supply deficit remains a key risk across the Group’s operations in spite of the slight improvement in the power supply in Q1 2020.
“To mitigate this risk, the Company has invested in generators that will be commissioned at Dalny and Renco Mines.These generators are expected to fully compliment power from the Power Utility by the end of Q2 2020,” he said.
According to the 2019 third quarter treasury bulletin published by the Finance Ministry, Zimbabwe’s power shortages during the period under review contributed to at least 20% output losses to the country’s mining sector.
According to the bulletin, Gold output in the third quarter of 2019 at 8 744 kg was 23% lower than the 11 412 kg realised during the same period in 2018.
Speaking on the COVID-19, he said the pandemic will have material negative effects on the group’s future business prospects and revenue.
“Consequently, the Group’s cash flows will come under severe stress going forward, however, the impact in monetary value terms is undeterminable and remains unknown,” said Beebeejaun.