LIVINGSTONE MARUFU
Resources group RioZim’s gold output dropped 9% in the third quarter to September 30 from the same period last year due to a disturbed production cycle attributed to delays in the payment of the company’s export receipts.
The firm is blaming Fidelity Printers and Refiners, a subsidiary of the Reserve Bank of Zimbabwe, for the payment delays which has left the company with limited working capital.
“The delays on the payment of the company’s gold receipts by the RBZ carried on throughout the quarter which severely strained the working capital and cash flows of the group and greatly hampered production,” company secretary Tawanda Chiurayi said in a trading update for the period.
The gold price maintained its upward trajectory averaging US$1 879/oz for the quarter, which was 29% above the average price of US$1 457/oz for the same period last year.
This helped to partly absorb the negative impact of the low production and increased costs during this period. Chiurayi said the Cam & Motor Mine continued with processing low-grade ores from its One Step Mine throughout the quarter.
Resultantly, the mine’s production went down by 8% from the same period last year.
He said civil works and steel fabrications for the Biological Oxidation (BIOX) plant project progressed timidly during the quarter.
Delivery of structural and steel components from the project’s contractors in South Africa faced significant delays due to lack of foreign currency funding, Chiurayi said.
He said RioZim was pursuing various funding options for its BIOX project albeit in a difficult operating environment which has been compounded by the uncertainties brought about by the Covid-19 pandemic as lenders and financiers are taking a conservative approach on lending. Dalny Mine suffered multiple breakdowns from its ageing plant, which negatively affected production throughput.
Consequently, production fell by 37% compared to the same period in 2019. Renco Mine, however, exceeded its 2019 comparative period production by 5% owing to improved milling throughput.
The mine benefited from its ‘high volume low grade’ strategy which was implemented throughout the quarter which resulted in increased gold production.
Chiurayi said the inflationary operating environment persisted into the third quarter and still continues to drive up the cost of production and erode operating margins.
RioZim highlighted that the quarter also saw a renewed wave of the Covid-19 pandemic with an increase in the number of cases and number of deaths.
The government swiftly tightened the lockdown measures in order to curb the spread of the virus. RioZim said power supply was fairly stable during the quarter.
The Empress Nickel Refinery remained under care and maintenance throughout the quarter.
The group’s associate Murowa Diamonds (Private) Limited recorded a 2% decrease in production compared to Q3 2019.
The reduction in diamond production was attributable to processing ore from K1 pits which are of low grade compared to the same period last year when the diamond producer was processing from the high-grade K2 pits.
