Monday, May 25, 2009

RioZim Seeks Funding for Zimbabwe Diamond Mine

By Zach Helke, Avi Krawitz
Posted: 05/24/09 10:13

RAPAPORT... Rio Tinto Zimbabwe Limited (RioZim) is renewing its mining efforts in Zimbabwe with hopes of attracting foreign investment as hints of political reform filter through. RioZim and its partner Rio Tinto are planning a private placement with existing shareholders to bring in new capital to new and existing projects in Zimbabwe. An extraordinary general meeting (EGM) is expected this week to vote on the proposal. According to the Zimbabwe Financial Gazette, shareholders will be asked to vote to allow RioZim to nearly double its share capital to 62,487,582 ordinary shares. The move comes as prime minister Morgan Tsvangirai breaks with president Robert Mugabe’s policy of shunning the west and is looking for aid from the U.S. ad Britain. Tsvangirai’s Movement of Democratic Change party also holds the finance ministry in Zimbabwe’s national unity government. “The liberalization of the economy along with some of the fiscal measures pronounced in the recent budget and monetary policy statements induce a sense of hope particularly for gold producers who for many years have been subjected to unviable local financial arrangements,” RioZim said in a recent statement. RioZim operates the Murowa Diamond Mine, as well as gold and nickel mines and exploration projects in Zimbabwe. Its main focus now, however, is to invest $200 million it hopes to raise from the placement, to revamp and expand operations at Murowa. The company hopes to expand processing at Murowa tenfold to some 2 million tonnes per annum, and therefore significantly ramp up production from the 237,058 carats of diamonds the mine produced in 2008. The Murowa operation saw profits rise 64 percent to $2.3 million in 2008.

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