RioZim to divest Murowa Diamonds stake

CLOUDINE MATOLA

RioZim Limited is preparing a sweeping disposal of strategic assets, including its stake in Murowa Diamonds Mine, a restructuring drive aimed at rescuing its strained balance sheet, extinguishing debt, and restoring profitability, Business Times can report.

The mining group, battling deepening financial distress, plans to offload its 22.2% shareholding in Murowa alongside multiple mining claims and non-core properties, as it pivots away from a weakening diamond business and seeks to unlock capital for its remaining operations.

At the centre of the plan is a calculated retreat from diamonds, once a cornerstone of RioZim’s portfolio but now weighed down by collapsing global prices and structural industry shifts.

The company has enlisted a consortium of leading financial advisers, including Morgan & Co, Kreston Zimbabwe, Forvis Mazars, WTS Tax Matrix and Corpserve, to structure and execute the disposals, which include the sale of immovable property and transfer of mining claims.

Directors expect shareholders to deliberate on the sweeping restructuring at an extraordinary general meeting (EGM) scheduled for April 22, 2026. If approved, RioZim aims to conclude key transactions in the second half of the year.

The proposed divestments come as RioZim grapples with severe operational and financial headwinds. Persistent power shortages, acute foreign currency constraints, and subdued commodity prices have crippled production across its operations, raising material uncertainty over the group’s solvency.

In response, the board has approved a broad restructuring programme that includes asset disposals, fresh borrowing, and a reconfiguration of its investment portfolio.

Chairperson Caleb Dengu told Business Times that the decision to exit diamonds reflects both operational realities and a rapidly evolving global market.

“The shareholders have decided to divest out of the diamond business for two main reasons: we have exhausted the open-pit ore and would now require significant capital to transition into underground mining. At the same time, global diamond prices have been depressed, partly due to the rise of lab-grown diamonds,” Dengu said.

Industry analysts say the surge in synthetic diamonds has disrupted traditional pricing dynamics, eroding margins for producers reliant on natural stones.

Shareholders will be asked to approve the disposal of RioZim’s 22.2% stake in RZM Murowa (Private) Limited for US$23.8m, alongside four diamond mining claims – ML 26, Sese, Shavahuru, and Bubi-for a combined US$4.6m.

Crucially, the transaction will also involve the full waiver of a US$60.7m shareholder loan owed by RioZim to RZM Murowa, effectively easing the group’s debt burden.

Beyond Murowa, the company plans to dispose of non-core properties in Nyanga and Newlands, targeting minimum proceeds of US$165,000 and US$254,000 respectively.

Additional measures include a proposed US$35m loan facility, secured against company assets, the disposal of the Mtandahwe Copper & Tungsten claim for at least US$3m, the sale of the One-Step gold claim for a minimum of US$1m, with upside potential tied to resource validation.

These disposals, subject to regulatory clearance from the Zimbabwe Stock Exchange, are designed to inject liquidity while streamlining the group’s asset base.

Dengu revealed that more than 15 potential investors have already expressed interest in participating in RioZim’s recapitalisation through a mix of equity and debt financing.

However, initial attempts to raise capital at the group level faltered due to the scale of funding required.

“As a result, the board resolved to segment the business and offer individual units as separate investment opportunities. This allows for more manageable capital commitments and enables proceeds from divested units to be channelled towards resuscitating the remaining operations,” he said.

The restructuring also includes a comprehensive debt overhaul aimed at improving liquidity and repositioning the company for long-term sustainability.

The April 22 EGM now looms as a defining moment for RioZim, a shareholder vote that will determine whether the group can execute one of the most significant restructurings in Zimbabwe’s mining sector in recent years.

If successful, the strategy could mark a turning point, allowing RioZim to shed underperforming assets, stabilise its finances, and refocus on core mining operations with stronger growth prospects.

But failure to secure shareholder backing or delays in executing the disposals could deepen the company’s financial distress, leaving its turnaround ambitions hanging in the balance.