RioZim seeks to raise US$60m

local banks agreed to co-underwrite the exercise.
This comes after the company’s initial ambitious plan to recapitalise stalled as the amount required was too large for a single underwriter and too risky for a foreigner, given the uncertainties surrounding the indigenisation policy.
At an extraordinary general meeting on May 26 2010, shareholders approved the US$40 million rights issue, with funds earmarked for settling debts, refurbishment and start-up of new mines.
Sources said local banks had agreed to underwrite part of the US$60 million rights issue, which now makes the exercise more certain.
“It has been resolved that RioZim should raise US$60 million to retire debt and finance working capital,” said one source. “Given the size of the RioZim debt, the US$40 million that the company initially wanted to raise would not cover its financial requirements.”
RioZim owes several banking institutions about US$53 million, borrowed largely on a short-term basis to finance operations.
RioZim managing director Mr Josh Sachikonye confirmed last Friday that “a solution has been found and we are now tying up the loose ends”.
On its US$40 million rights issue, Essar Global had agreed to be underwriter but pulled out at the eleventh hour citing indigenisation concerns.
Mr Sachikonye said at a presentation ahead of the EGM that of the US$40 million, US$13,5 million would be spent on retiring debt. The refurbishment of Renco and Empress mines would absorb US$4 million and US$5 million respectively.
A total of US$14 million was earmarked for new projects with US$5 million going into restarting Cam and Motor Gold Mine in Kadoma while US$2,5 million was to be spent Darwendale chrome project in which RioZim holds a 60 percent stake.
A further US$4 million was to be spent on exploration at Renco, US$1 million on Chimakasa nickel project and US$1 million on further evaluation of the Kenilworth gold project north of Gweru.