RIOZIM will now proceed with its delayed $10 million rights offer meant to raise funds for a key project, as certain conditions that are yet to be fulfilled do not require prior approval.
The listed gold miner said last week the rights offer will now open on June 8 after it obtained exchange control approval for GEM RioZim to underwrite the cash call.
RioZim said the offer, meant to raise funding to kick start its anticipated cash cow, Cam and Motor gold mining project in Kadoma, will close on the 26th of the same month.
RioZim said other conditions precedent, approval in terms of the Indigenisation and Economic Empowerment Act, do not require prior approval and had therefore been waived.
RioZim said it was also not legally required to obtain approval from indigenisation and economic empowerment authorities.
This was realised after consultation with the Ministries of Mines and Mining Development and Youth Development, Indigenisation and Empowerment
The Zimbabwe Stock Exchange listed company said in light of this it had resolved to waive the condition cognisant of the financial situation of the company and need to implement the Cam and Motor Gold Mining Project.
“In light thereof, in terms of the extraordinary general meeting held on February 19, 2015, it is hereby agreed that the RioZim rights issue is no longer suspended and shall continue as per the revised calendar,” the company said.
Since January, RioZim had been working on the modalities of the $10 million rights issue, but while administratively all was in order, the cash call could not proceed as the other conditions precedent had not been fulfilled.
Major shareholder and prospective underwriter Gem RioZim Investments advanced RioZim $700 000 in part subscription to the miner’s proposed $10 million rights offer to fund the resuscitation of its Cam and Motor gold mine.
Gem RioZim Investments holds a 24,97 percent stake in RioZim and will fully underwrite the capital raising exercise to fund the project believed will turnaround its fortunes.
The Kadoma-based Cam and Motor mine, once Zimbabwe’s largest gold producer, was mothballed in 1968 after producing 5,3 million ounces of gold. RioZim contends the project holds the key to its current financial woes.
In anticipation of the right offer, RioZim placed an order for a 1 500 tonnes per day plant, which at full capacity is expected to produce more than 3 000 ounces of gold per month.
Last June, the miner said it had secured $45 million targeted at settling its $40 million bank debt, owed $91 million two years back, including $60 million in accrued interest. Last year, the miner’s gold production declined due to heavy rains that affected its Masvingo-based Renco Mine.
This comes as the Zimbabwe Stock Exchange-listed miner recorded a net loss of $7,5 million in the half year to June 2014 due to high finance costs and unbudgeted for expenses.
Lower production at Empress Nickel Refinery and Renco Mine and lower gold and copper prices saw turnover declining by 31 percent to $39,9 million in the half year to June.