MINING and exploration company RioZim Limited seeks to stabilise its cashflow by funding a Cam and Motor gold mining project which it intends to finance through a $10 million renounceable rights offer.
The Cam and Motor Mine is situated about 10km east of Kadoma and was once the largest producer of gold in Zimbabwe.
RioZim has a diversified portfolio of mining assets, including gold, diamonds, coal, base metals and a base metal refinery.
However, the miner has not been spared by the economic turmoil in the country, announcing in 2014 that it was negotiating for a $45 million facility to refinance the group’s debt, which stood at $40 million.
In a circular to shareholders yesterday, RioZim said directors had proposed raising $10 million by way of rights offer, which could be rejected by shareholders.
GEM RioZim investments will fully underwrite the rights offer.
“Funds raised through the rights offer will be used to pay for capital expenditure required for the opening of the Cam and Gold mining project and to retire other obligations due to GEM as detailed in the underwriting agreement.
“The Cam and Motor gold mining project is one of key projects that is expected to get the group turnaround strategy back on track,” the circular said.
RioZim said the consequences of not implementing the renounceable rights offer were continued cash-flow constraints.
It added that an order of a 1 500 tonnes per day plant, which at full capacity is expected to produce more than 3 000 ounces of gold per month, had already been placed.
“Recent geological and metallurgic test work revealed that with the current technology and at the current grades of ore, Cam and Motor is capable of producing significant amounts of gold at a competitive cost of production.”