RioZim secures underwriter for rights issue

after the company’s debt restructuring exercise.
Managing director Mr Josh Sachikonye confirmed the company would embark on a limited capital raising – and not the initial US$40 million – to fund growth projects at Cam & Motor gold mine and expansion at its Renco gold mine.

He said after debt restructuring the company requires limited capita, without divulging the new figures – indications are that the company is likely to go for less than US$20 million.
RioZim had proposed to raise US$40 million through a rights offer after the collapse of capital-raising talks with Essar Africa Holdings.

RioZim has appointed regional bank BancABC as the lead arranger to restructure its debt, understood to be around US$450 million with local banks.
“BancABC is enlisting the services of other banks to consummate this transaction within a month,” said Mr Sachikonye, “BancABC is consulting with local banks on the structure that suits both the borrower and lenders,” he said.

The banks were in agreement with the proposal and BancABC was working on the details.
The group is also “sweating” some of its current assets to generate cashflow to liquidate the debt within the 12 to 18-month period.

“We are going to dispose of our metal stocks and we are also negotiating with the banks to extend the tenure of the debt and those who cannot hang on for long will be issued with instruments to exit the debt,” Mr Sachikonye said.

He added that the debt restructuring did not mean the banks were seeking equity in exchange for the money owed.
Sources had indicated that BancABC was negotiating for exchange for equity in RioZim at a discount compared with the conversion rate that was agreed with Essar Africa.

Mr Sachikonye said the banks involved had carried an assessment of RioZim and were satisfied with current operations and the viability of the company adding that the company had begun operating profitably.

After restructuring its debt and cash raising initiative the group’s revenue should grow by about 300 percent.
The revived Cam & Motor Gold Mine and Renco Mine are expected to drive revenues for the group. However, this will depend on profitability and sensibility of prices on the international market.

Management at the company are optimistic that two operations will drive the margins of the group in the next three years.
Cam & Motor was closed in 1968 and was once Zimbabwe’s largest producer of the precious metal, producing 150 tonnes annually. It reopens as an open cast mine.
From this operation RioZim anticipates an annual production of 2 000 kilogrammes or 700 ounces.