HARARE – Auditing firm Ernst & Young Chartered Accountants Zimbabwe (EY) has raised a red flag over RioZim’s operations despite the listed resources firm registering a $2,5 million profit last year.
“The group’s current liabilities exceeded its current assets by $30,8 million,” EY said in a statement accompanying RioZim’s financials for the period under review.
“These conditions, along with other matters… indicate that a material uncertainty exists that may cast significant doubt on the company’s and group’s ability to continue as a going concern,” the auditors added.
EY also pointed out RioZim’s quantification of in process metal inventories, recognition of deferred tax assets and impairment considerations in passing the going concern verdict.
Meanwhile, RioZim — which was recently under fire for misrepresenting facts when it acquired Murowa diamonds from Rio Tinto for its major shareholder — saw its revenue growing by 15 percent in 2016 to $65,2 million up from $56,5 million in 2015.
The group’s chairperson Lovemore Chihota said the group closed the year with a net profit after tax of $2,5 million from an $8,8 million loss.
He also pointed out that the group had benefited from relief provided by a debt restructuring carried out in 2016, which resulted in net finance costs reducing by 20 percent to $5,4 million from $6,7million in 2015.
“Given the capital intensive industry in which the group operates, we further look forward to the introduction of facilities and policies that avail long term affordable funding, as access to such funding remains a challenge,” the RioZim boss said.
In October 2016, RioZim’s new Cam & Motor gold processing plant was commissioned with full production set to commence this year.
“Throughout the year, the company continued to haul ore from Cam & Motor Mine for processing at a rented nearby plant. Cam & Motor’s gold output almost doubled in 2016, increasing by 90 percent to 856 kilogrammes (kg) from 450 kg in the prior year.
“Renco Mine experienced a marginal four percent decrease in gold output to 712 kg from 749 kg in 2015 due to subdued grades owing to the Mine’s complex ore body,” said Chihota.
The group’s associate, Murowa Diamonds Limited is recovering on the back of a number of initiatives implemented in 2016.
“These include the rolling out of a new mining plan, doubling the plant’s processing capacity and investment in owner mining.
“These steps have resulted in a sharp drop in RioZim’s share of loss for the year from $2,2million in 2015 to $267 000 in 2016,” Chihota said.
In 2016, RioZim’s chrome project remained on hold as its feasibility remains uncertain due to depressed chrome prices in the face of prevailing high power tariffs.
Going forward, Chihota said the group has embarked on a number of initiatives targeted at returning it to sustainable profitability and growth underpinned by its drive to invest in exploration and accelerated development.