RIO Zim Limited posted a net loss of US$7 million for the half year to June 30 2015 from another loss of US$7,5 million last year largely due to the effects of the non-operating Empress Nickel Refinery (ENR).
Management says group operations in 2015 will continue to suffer due to the effects of the non-operating Empress Nickel Refinery (ENR) but the impact will be reduced through capacitating Renco Mine as well as Cam and Motor.
In a statement accompanying its financial result on Tuesday, RioZim said its loss position for the period under review emanated from the unavailability of matte supplies at ENR, declining metal prices and high cost of debt.
“In the first half of the year ENR was predominately under care and maintenance due to unavailability of matte supplies from its sole supplier and resultantly posted a trading loss of US$2,1 million,” said RioZim.
The decline in metal prices on the world market including gold also negatively affected the group’s performance. The company’s cost of funding has remained extremely high.
Despite these challenges however, the company experienced a 61 percent improvement in gold output as a result of an initiative to process ore from Cam & Motor using a rented plant.
Profitability was further affected by high interest cost of US$4,6 million which accounted for 65 percent of the group’s net loss.
“These factors indicate the existence of a material uncertainty on the group’s ability to continue as a going concern and therefore that it may be unable to realise its assets and discharge its liabilities in the normal course of business,” said RioZim.
Chief executive officer Noah Matimba, in an interview after the group’s AGM, said operations are also behind target due to the effect of ENR.
“ENR is a major operation, and the fact that it is currently under maintenance means we cannot meet our target. As a result our 2015 outlook is that we will continue to suffer from non-operating ENR,” he said.
While the refinery is still under maintenance, the group is negotiating with third party material suppliers and also engaging both local and regional producers.
“We are looking for suppliers because what we need is nickel and copper matte,” said Matimba.
“However local producers cannot fill the refiner’s capacity of 17,000 tonnes per year as estimates show that local supply is at between 6 to 7 tonnes per annum.”Advertisement
In terms of gold operations, Matimba said the group is targeting annual output of 680 kg in 2015, up from 640 kg last year. Production at Renco has also consistently been improving in comparison to previous years.
However the mine requires more capital to replace aged equipment and for more exploration as well as development work.
“Some of the work has already started. When complete we will see more production with output at the mine reaching at least 80 kgs per month,” Matimba added.
He said Cam and Motor mine is currently producing 50 kgs per month with output expected to increase to 180 kg per month if a new plant in installed.
“We are looking at a significant increase in gold production as a group.
“The new plant for Cam is currently being manufactured in China and components will start arriving before year end and installation will be complete by the end of Q1 2016.”