RioZim Limited has cautioned that it has closed three mines due to foreign currency shortage in Zimbabwe.
The closure follows a cautionary statement on which RioZim said that the country is facing severe challenges arising from the Company’s inability to access its foreign currency earnings that are required to fund its operations and sustain its growth.
“Further to the cautionary statement published on the 10th of October 2018, the Board of RioZim Limited would like to update the Company’s shareholders, all other stakeholders and members of the public that, the challenges arising from the Company’s inability to access sufficient foreign currency to support its operations remain an issue,” RioZim Management Services (Private) Limited, Per Z. Makorie said.
“In the meantime, the Company’s operations at Cam and Motor Mine, Dalny Mine and Renco Mine involuntarily stopped operations until sufficient foreign currency can be accessed.”
RioZim says lack of foreign currency has also started to have a significant negative impact on the company’s ability to meet its projected targets.
“The challenge which the Company faces is that its revenues have shrunk leading to a severely depressed production whilst its cost base continues to fluctuate and like most mining companies, the Company’s costs are largely fixed and the Company can only benefit from increased production,” the mining company said. “Locally, costs have increased exponentially.”
“In addition, the gold business requires access to foreign currency in order to fund very important sustaining capex projects. For example, the Company needs to establish a Biological Oxidation Plant at Cam & Motor Mine which is required to treat refractory ore as the nearsurface oxidized ore was already depleted at the end of last year.”
“Unless the Company is allowed to access adequate foreign currency to fund this project, it will not be able to build this plant thereby adversely affecting the viability of the mine.”
RioZim also says that discussions on the foreign currency allocation with the Reserve Bank of Zimbabwe (RBZ) are ongoing.
“In addition to the engagements with the Reserve Bank of Zimbabwe, the Company, directly and via the Chamber of Mines is also engaging the Ministry of Finance, the Ministry of Mines and other key stakeholders in order to resume operations as soon as is possible,” Makorie said.
