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RioZim gold output falls 27%

by Staff reporter
11 Apr 2021 at 06:44hrs | Views
LOW ore grade at the Zimbabwe Stock Exchange-listed gold producer RioZim's flagship unit Cam&Motor Mine saw the firm's total output tumble by 27% during the year ended December 31, 2020, said the firm on Friday.

RioZim said breakdowns at Dalny Mine, one of its key operations, also contributed to the slowdown.

Gold output declined to 1, 21 tonnes during the review period from 166 tonnes in 2019.

"Throughout the current year, the group's flagship operation Cam & Motor Mine carried out mining activities from the nearby One Step Mine hauling low grade ore to the Cam & Motor plant for processing.

"This resulted in a drastic fall in gold production compared to the prior year when the mine processed higher grade ore from its Cam pits," RioZim said in a commentary to the financial statements.

It said low ore grades were offset by higher gold prices during 2020.

Gold prices averaged US$1 765 per once (oz) during the review period, which was 27% higher than 2019's US$1 395/oz.

The company swung to a net profit for the year from a loss in 2019.

The firm said output at Renco Mine rose by 4% to 580kg during the period after management unveiled a strategy to increase milling throughout.

But output at Dalny Mine plummeted by 46% to 198kg after the operation was hit by breakdowns in the milling section of its ageing plant.

Dalny is one of Zimbabwe's oldest gold mines.

On the regulatory side, the foreign currency auction system brought some relief, but gains were reversed by tighter export retention requirements announced this year.

"The review upwards by the central bank of the gold retention to 70%, coupled with the replacement of the fixed exchange rate with a foreign currency auction-determined rate towards the end of the first half, were welcome developments which had a positive impact on the company in the second half of the year," RioZim said.

It joined several firms that have said the foreign currency auction system had saved their operations from the second half of 2020.

But at the beginning of the year, the Reserve Bank of Zimbabwe started giving exporters just 60% of their earnings, which, RioZim says "has left the company in an extremely challenging position arising out of the markedly reduced amount of requisite foreign currency required for the basic continuation of operations."

Covid-19 hit RioZim's expansion plans, both for the BIOX plant, and for its energy projects.

Plans to secure funding for the first phase of the 2 800-megawatt (MW ) Sengwa power project "were significantly hampered by the uncertainties presented by the Covid-19 pandemic".

The company is progressing with selecting an external power contractor for the 178MW solar projects for its mines, and is waiting for finalisation of power purchase agreements with the Zimbabwe Electricity Transmission and Distribution Company.

Source - the standard