The graph below shows RioZim quarterly, full year (FY) and half year (HY) gold production since Q32021. All units are in percentage. Where there is 0, it means the mine did not produce anything
Harare- Gold and Diamond mining firm, listed on the Zimbabwe Stock (ZSE) RioZim Limited has posted another decline in gold production during the first quarter ended 31 March 2023 owing to headwinds both at macro and micro-economic levels.
From the macro-economic level, the Company succumbed to load-shedding and surrender of foreign currency to the RBZ in return for the ailing Zimbabwe dollar currency while at the micro-economic level, technical challenges were obtained.
Gold production fell by 2% from the same period in the prior year. The company said this was due to the power supply challenges which worsened during the quarter due to load shedding and unstable power infrastructure.
The Company had to invest in additional generators to increase capacity and coverage of the key activities in the mine’s production critical path.
There was no reported production at Dalny Mine as the company said the mine embarked on small-scale mining operations to reduce the cash flow impact of the fixed care and maintenance costs. Production is expected in the second quarter of this year.
In HY 2022, Renco Mine registered a 37% decline in output while Dalny’s gold production was just 8kgs from 105 kgs in the prior comparative period. In FYY2022, Renco’s gold output further declined by 28% while there was no production at Dalny Mine.
During the third quarter of 2022, there was no production at Dalny while output at Renco fell by 15%.
Since the beginning of 2022, the company never recorded any gold increase. During the first quarter of 2022, there was no production at Dalny while at Renco, production decelerated by 21%.
The trend dates back to the full-year ended 2021 when the company’s gold production fell by 3% (Renco Mine). Production was realised in Q32021 when Renco Mine registered a 1% gold uptick while at Dalny, output scaled up by 31%.
From a business point of view, although retention thresholds were reduced to 25% from 40%, given the rapid depreciation of the local currency against the US dollar, this is still not a viable move for businesses, especially the mining industry where most of the equipment is imported. Against the rapid depreciation of the local currency, being cognisant that suppliers are now quoting the parallel market rate than the auction market rate, the government should consider scrapping the surrender thresholds. However, the Company also needs to find ways to navigate in such turmoil times.
From an economic perspective, the company is positive about the impact of load-shedding on minimising business. Mining requires a large chunk of power supply for production to take place.
However, when there are recurrent power cuts like the ones during the period under review, companies have to invest in alternative power sources like solar systems for long-term solutions and backed-up generators. These, however, are expensive, though a necessary risk. They increase operating costs and diminish returns.
During the period under review, Renco Mine relied on generators for power backup.
However, to offset continued production losses, the Company needs to put more weight on solar investments, which are costly, but worth it as Zimbabwe’s power situation remains clouded. In the presentation of its FY2022 financial results, the Company said it is still courting possible investors on its 178MW Solar Project and concerning the 2800 Sengwa Power Station, the Coompany said it is still courting various stakeholders for possible partnerships.
Since 2018, electricity remains the key challenge to the gold-mining firm.
However, the Company said gold production at Cam and Motor Mine increased by 92% from the comparative prior year’s first quarter. This was on the back of the Biological Oxidation (BIOX) plant that came into operation in Q2 2022, which has enabled the mine to upscale production volumes.
“Despite the notable improvement in production from the prior year, production from the BIOX plant is currently operating below nameplate plant capacity and the focus in the current year is to continue upscaling production to the full capacity of the plant,” said the Company.
In the diamond business, the Group’s Associate, RZM Murowa (Private) Limited recorded a 20% increase in production compared to the same period in the prior year due to increased throughput and plant capacity after commissioning the 500tph plant in Q3 2022.
The mine continues to process material from its low-grade stockpiles,” said the Company.
The Company added that the mine was also expanding its exploration activities which are mainly centred on extending the life of its pits to resuscitate mining operations in the current pits.
Going forward, the Company said its main focus will be stabilising power supply across all its operations to ensure consistent plant throughput. The Group said it will continue to invest in alternative power supply albeit coming at a higher cost of production.
“Exploration remains at the centre of the Group’s expansion drive hence the Group is focused on expanding its exploration activities across the Group’s resource portfolios and upgrading the resources of the producing mines to increase the confidence levels,” concluded the Company.
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