Ferrochrome producer Zimbabwe Alloys has recovered 150 tonnes of metal from its dumps after an unnamed Chinese firm commenced recovery last month, while talks with a potential investor to inject $50 million fresh capital into the business will be concluded in three months, the company’s judicial manager has said.
Zim Alloys, previously owned by Anglo-American Plc and sold to the Farai Rwodzi-led Benscore consortium for an equivalent of $10 million in 2005, was placed under final judicial management last year due to poor performance attributed to the closure of its four furnaces, poor global metal prices and escalating costs.
At the time it was placed under administration, the group’s net asset position stood at $71 million while net current liabilities were at $36.7 million.
It owes $20 million to its biggest creditor Interfin Bank, which is also under curatorship and in which Rwodzi is also a major shareholder.
Judicial manager Reggie Saruchera of Grant Thornton said today that an unnamed Chinese firm had commenced recycling of its dumps last month with equipment bought from China in line with an agreement signed earlier this year.
“The equipment came last month and they have commenced recovery at a rate of between two and three percent. During the first month (September) they recovered around 150 tonnes,” he said, adding that a tonne was worth between $600 and $700.
Saruchera said the dump recovery would be completed in the next four years.
He said talks with an unnamed potential investor from India were at an advanced stage.
The company is seeking $50 million in fresh capital to run its furnaces and pay creditors.
“So far they finished the technical and mining due diligence. They are now finalising the financial due diligence and in the next stage we will discuss their offer,” he said.
Saruchera said negotiations were likely to be completed in the next two to three months when the offers would be concluded.
Currently, he said, the company was operating at full production including the brick-making project. He did not give production figures.
Last November, Saruchera told creditors at the High Court that the Chinese firm would recover metal from half of its slag dump estimated at four million tonnes and worth $2.7 million, while a South African mineral processing firm, Specialised Metallurgical Projects, would utilise the other half.
At the time, the company planned to upgrade its Lalapanzi plant near Gweru to increase production to 7 000 tonnes per month while the Sutton Mine works in Mutorashanga were to be upgraded and new equipment installed to realise about 14 000 tonnes of concentrate per month.
All these initiatives were expected to generate $46.6 million in revenue per annum, with an estimated operating profit of $13.6 million.
The government imposed a ban on chrome ore exports in April 2011, in a bid to promote local refining but granted Zim Alloys temporary permission to export its chrome ore.
Zim Alloys is owned by Benscore Investments, which holds 83 percent equity; Spain’s Cometal SA; Cometal Trust Zimbabwe and Rosenmarket Investments, with 10 percent, five percent and two percent respectively.- The Source