Invictus in quandary

CLOUDINE MATOLA

Invictus Energy Limited has flagged material uncertainty over its ability to remain operational as mounting losses and acute funding constraints place its flagship Cabora Bassa project under severe strain, Business Times can report.

The oil and gas explorer cautioned that without an urgent capital injection, its capacity to sustain operations in the near term is no longer assured, thrusting one of Zimbabwe’s most closely watched energy prospects into a precarious financial position.

Managing director Scott Macmillan signalled that the company’s liquidity is tightening rapidly, with funding now critical within the next month to keep operations afloat.

For the half-year ended 31 December 2025, Invictus posted a loss after tax of US$4.23m, widening from US$3.32m in the comparable period. Net cash outflows from operating and investing activities stood at US$4.12m, underscoring persistent pressure on cash reserves, albeit improved from the prior year’s US$7.57m.

While the financial statements have been prepared on a going concern basis, the company acknowledged that this assumption is increasingly fragile.

“The going concern concept relates to the company’s ability to continue its operations and meet its obligations as they fall due over the next 12 months,” Invictus said, warning that prevailing conditions expose the group to heightened financial risk.

Critically, internal forecasts extending to March 2027 indicate that additional funding will almost certainly be required to sustain exploration and development at Cabora Bassa, a reality that has triggered a formal material uncertainty warning.

“This results in a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern,” the firm said, adding that failure to secure funding could impair its ability to realise assets and settle liabilities in the ordinary course of business.

Directors are banking on the long-term potential of the asset to attract fresh capital, expressing confidence that investors could support the project through debt or equity financing.

However, that outcome remains far from guaranteed.

Invictus warned that if funding avenues fail to materialise, it may be forced into distressed asset disposals, potentially at valuations significantly below those currently reflected in its books — a scenario that would crystallise losses for investors.

“Should the company not be able to continue as a going concern, it may be required to realise its assets and discharge its liabilities outside the ordinary course of business, and at amounts that differ from those stated,” the company said.

Notably, the current financial results do not incorporate any such downside adjustments, meaning the potential financial fallout of a collapse remains unpriced.

The warning marks a pivotal inflection point for the Cabora Bassa project, once positioned as a transformative energy play, but now increasingly dependent on investor confidence at a time of tightening global capital and elevated risk aversion.