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(HERALD) RioZim acts on US$50 million debt

RioZim acts on US$50 million debt
By Bright Madera
Wednesday, 18 May 2011 21:42

RIOZIM Limited says it is restructuring its US$50 million debt by converting its metal stocks into cash in the next 12 months. Managing director Mr Josphat Sachikonye told Herald Business the group's operations were in a profitable mode. The company would use internal resources to settle its debts.

"We are in the process of restructuring our debt and we are also going to convert our huge metal stocks into cash and be able to retire our local expensive debt in the next 12 months," he said.

"We are also expecting Empress Nickel Refinery to be profitable and generate cash, which would be expanded to retire the local debt."

He said the group still required a strategic partner and joint ventures to undertake growth projects.

RioZim said it was pinning its hopes on the collapsed Essar Africa Holdings deal. Essar had planned to take control of 51 percent of the company.

RioZim had wanted Essar to underwrite its intended US$40 million rights issue, of which US$15 million was to be channelled towards debt repayment.

Mr Sachikonye also revealed that they were negotiating with potential investors after the fallout with Essar.

"We are talking to serious investors, who have shown interest in investing in the company, but I cannot divulge the details," he said.

On recent reports that several banks were exposed to risk after RioZim borrowed US$50 million, Mr Sachikonye said in a statement the group's resources, asset base and capacity to produce were considered sufficient to cover the current exposure to the banking sector.

"The debt situation has always been made public as published in the audited financial statements for the year ended 31 December 201," he said.

"RioZim has not defaulted with any bank and is servicing its debts on terms and conditions agreed with the various financial institutions. It remains a viable company with sufficient resources and capacity to perform well in future and deliver value to its shareholders."

In the short term, the company is buoyed by prospects at Cam and Motor Gold Mine with an estimated one million ounces of proven gold deposits.

Darwendale Chrome deposits also confirmed the existence of an inferred alluvial resource in excess of six million tonnes of ore.

Further developments at Renco are expected to uplift production to 44 000 ounces a year.

RioZim are sitting on an asset base of US$200 million, Sengwa coal deposits (1,3 billion tonnes), a 22,2 percent interest in Murowa Diamond Mine, Cam and Motor Gold Mine, Darwendale Chrome deposits and Empress Nickel Refinery.

Investment analysts yesterday said RioZim remained an attractive company given its potential and mineral deposits.

They said most companies had been borrowing and that there had been no substantial fresh capital into companies since the introduction of the multiple currency system.
Most companies have been struggling to retire expensive local debt and to attract fresh capital.

"Very few companies have managed to capitalise because there has been minimal fresh capital into companies," said an investment advisor with a local bank.

"There are a number of micro-economic issues when it comes to refinancing debt."

Labels: JOSPHAT SANCHIKONYE, RIOZIM

posted by MrK @ 3:25 PM