MINING group RioZim majority shareholders are in discussion with “interested parties” to sell their shares to potential investors.
This follows years of underperformance by the mining concern underpinned by shrinking liquidity and rising losses, which is facing financial and operational challenges.
The miner’s annual results between 2019 and 2023 have shown that the firm has been
struggling.
Last year’s results are still to be released.
As of Wednesday, RioZim shares were valued at US$4,7 million.
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In a statement yesterday, RioZim said: “The shareholders and investing public are further advised that the major shareholders have been in discussion with several interested parties and are now in the final stages of negotiating with an investor to purchase the majority shares in the company (hereinafter referred to as ‘the transaction’).
“Shareholders are advised that the said transaction remains subject to the completion of due diligence, signing of the sale and purchase agreements, obtaining any required regulatory and shareholder approvals.”
RioZim said upon conclusion of the transaction, the investor would make a mandatory offer to the remaining minority shareholders to purchase their shares in the company.
The miner also announced the resignation from the board of non-executive director Mustafa T Sachak with effect from February 20, 2025, having served on the board and chaired various committees for 10 years since November 6, 2014.
RioZim has also admitted that it is facing financial and operational challenges, confirming years of underperformance underpinned by shrinking liquidity and rising losses.
Since 2019, the firm has only managed to post a profit after tax for the year ended December 31, 2020, which was owing mostly to better gold prices.
Otherwise, for the other years within the five-year timeframe, RioZim has been posting significant and rising losses.
“The directors of RioZim Limited (the company) wish to advise its shareholders and the investing public that the company has been facing financial and operational challenges,” RioZim said in a statement.
“Shareholders and the investing public are advised that the company is involved in the final stages of negotiations with a potential lender.
“The conclusion of the negotiations is imminent which will resolve the company’s challenges.”
In its annual period ended December 31, 2019, RioZim posted a loss of ZWL$581,37 million.
During the same period, the miner had just ZWL$1,23 to every ZWL of short-term debt.
This comes as the firm was facing operational challenges at its gold mines, Renco and Cam & Motor, leading to reduced production.
RioZim’s other mines include Murowa Diamonds and Empress Nickel Refinery.
By 2020, however, the miner posted a profit after tax of ZWL$452,73 million owing to a 27% increase in gold prices.
Despite this, the firm started to see a decline in its liquidity after posting ZWL$1,20 to every ZWL of short-term debt from the prior year as its obligations grew.
In 2021, due to continued operational challenges at its gold mines, RioZim recorded a reduction in production for the annual period leading to a loss of ZWL$2,09 billion.
In terms of liquidity, RioZim obligations grew resulting in the firm being left with ZWL$0,51 to every ZWL of short-term debt officially, leaving the firm illiquid.
The following year saw the operational challenges continue to widen, significantly dropping production and leading to an overall loss for the period of ZWL$20,04 billion.
Meanwhile, RioZim’s debt obligations rose just over 830% leaving the miner with just ZWL$0,29 to every ZWL of short-term debt.
For its 2023 performance, the firm recorded a loss of ZWL$95,8 billion as the existing operational challenges subdued production.
This led to an increase in debt obligations of nearly 960% resulting in RioZim, having just ZWL$0,21 to every ZWL of short-term debt.
Another factor in all these losses was the exchange rate volatility.
While RioZim is still to post its financial results for the period 2024, its first half year report shows the firm was not faring any
better.
For the half year period ended June 30, 2024, RioZim recorded having ZiG0,20 to every ZiG of short-term debt on the back of debt.
Further, the miner recorded a loss of nearly 50% of ZiG165,71 million during the half year.
RioZim revealed that any result from its efforts to resuscitate the company would be announced as and when they happen.
“Shareholders and the investing public are advised to exercise caution when dealing in the company’s securities,” the miner
said.
