HomeBusinessRioZim Seeks Funds for new Mining Projects

RioZim Seeks Funds for new Mining Projects

ZIMBABWE Stock Exchange-listed RioZim is courting new investors to inject funds in the company through a private placement of shares to raise an unspecified amount of capital, the company said this week.


The board is still to get the green light to pursue the private placement from shareholders at an extraordinary general meeting (EGM) scheduled for end of May.

The company is seeking shareholder approval to increase its share capital by 62,5 million for the purpose of RioZim Employees Share Purchase Scheme and endorse the process of recapitalisation by private placement.

RioZim’s share this week rose above US$2,20.

Due to the dollarisation of the economy last year, analysts say smaller investors will not be able to follow their rights in the event of a rights issue.

Analysts believe more listed companies will come to the market with similar funding arrangements because of lack of liquidity on the market.

Smaller investors are expected to approve the private placement because management hopes the funds will enable the company to pursue new mining projects and exploration.

“The company has prospects and projects that could significantly increase the number and scale of operations in its portfolio. Apart from financial capability, your directors consider that engaging partners who have relevant technical expertise and skills will expedite and enhance the development of these projects to the benefit of shareholders,” said RioZim in a statement.

The company says it needs capital to pursue fresh mining projects and undertake exploration that
will eventually benefit all shareholders.

“RioZim would have to talk to foreigners if they need capital because at the moment locals cannot chip in with capital after the dollarisation of the economy,” an analyst said.

Zimbabwean mining companies have not been able to invest in exploration – a key investment in the industry in terms of long-term sustainability of operations – in the past decade due to an economic crisis characterised by an acute shortage of foreign exchange.

Over the years, ZSE-listed companies had resorted to rights issues as a means of raising capital but dollarisation has left local investors without liquidity.

RioZim is wholly owned by locals after Rio Tinto divested from its key Zimbabwe business, opting to remain with a significant shareholding in Murowa Diamond.

BY CHRIS MURONZI

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