PAGE PAGE · 2017-09-06 · PAGE PAGE 1 RIOZIM LIMITED ANNUAL REPORT 2013 Performance Highlights 03 Operations’ Location 04 Company Overview 05 Directorate and Management 07 Board

R I O Z I M L I M I T E D A N N U A L R E P O R T 2 0 1 3P A G E P A G E 1

Performance Highlights 03

Operations’ Location 04

Company Overview 05

Directorate and Management 07

Board of Directors and Executives 08

Chairman’s Statement 10

Chief Executive Officer’s Review 14

Health, Safety and Environment 21

Social Performance and Labour Practices 30

Report of the Directors 33

Corporate Governance 34

Directors’ Responsibility for Financial Reporting 37

Direct and Indirect Shareholding of Directors 38

Independent Auditors’ Report 40

Consolidated Statement of Comprehensive Income 42

Consolidated Statement of Financial Position 43

Consolidated Statement of Changes in Equity 44

Consolidated Statement of Cash Flows 45

Notes to the Financial Statements 46

RioZim Top 20 Shareholders 102

Notice of Annual General Meeting 103

RIOZIM VISIONTo be a leading diversified regional company delivering

sustainable shareholder value from natural resources.

CORE VALUES• Integrity

• Fairness

• Accountability

• Professionalism

• Transparency

• Reliability

• Diligence

• Commitment

• Teamwork

MISSIONTo achieve success through:

• Optimisation of existing business.

• Exploration for new opportunities.

• Implementation of world-class

operating standards.

• A culture of success.

• Recognition of our employees and

communities.

• High standards of Health, Safety &

Environmental management.

• Good corporate governance.

A N N U A L R E P O R T 2 0 1 3

Table Of Contents

R I O Z I M L I M I T E D A N N U A L R E P O R T 2 0 1 3 P A G E 2

RIOGOLDConsists of: Renco Mine: located in south eastern Zimbabwe in Nyajena communal lands. The mine has an average monthly production capacity of more than 70kgs of gold. Cam & Motor Mine: located in Mashonaland West. It was once Zimbabwe’s largest gold mine. The mine is set to be re-opened in the second half of 2014.

One Step Mine & Other gold assets.



For periods ended 31 December

Production

Gold (kg)

Social

Number of employees

Safety

Lost Time Injury cases

Environment

Water consumption (megalitres)

Sulphur dioxide emission (tonnes)

Performance Highlights

2013 2012

618 678

2 845 1 754

9 17

1 626 1 334

906 742

1.8 3.4

1 725

3 360

1 703

2 869

Lost Time Injury Frequency Rate (LTIFR)

P A G E

LOSS FOR THE YEAR

Nickel (tonnes)

Copper (tonnes)

2013

2013

2013

2013

2012

2012

2012

2012

2011

2011

2011

2011

REVENUE OPERATING PROFIT

CURRENT RATIO

increased to $106m, from $72m in 2012

decreased to $4.7m, from $5.5m in 2012 remained at 0.77

decreased to $2.1m, from $4.6m in 2012


Operations’ Locations

RIOZIM LTD

CURRENT OPERATIONS

AND PROJECTS MAP


Company Overview

RioZim Limited is incorporated in Zimbabwe and listed on the Zimbabwe Stock Exchange. The Group currently operates

the Renco Gold Mine in the south east of Zimbabwe and the Empress Nickel Refinery (ENR), near Kadoma, in central

Zimbabwe. The Group also owns 50% of Sengwa Colliery (Private) Limited in Gokwe North and holds a 22.2% interest in

Murowa Diamonds (Private) Limited.

The Group’s New Operating StructureThe Group is in the process of finalising a new structure which will enable capital to be raised at subsidiary levels whilst

remaining indigenous. This new structure will be as below:

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RioZim Limited

RioGold(Private)Limited

RioBaseMetalsLimited

RioEnergy(Private)Limited

RioChromeLimited

RioDiamonds(Private)Limited


Encompassing the Chrome assets and future Chrome operations of RioZim.

RIOCHROME



Directorate and Management

DIRECTORATE

E N Mushayakarara (Non Executive Chairman)

A S Ndlovu (Chief Executive Officer)

J L Nixon (Deputy Chairman)

S R Beebeejaun (Non Executive Director)

M P Mahlangu (Non Executive Director)

L P Chihota (Non Executive Director)

K Matsheza (Non Executive Director)

M T Sachak (Non Executive Director)

A F Nhau (Non Executive Director)

BOARD COMMITTEES

AUDIT AND RISK COMMITTEE

A F Nhau (Chairman)

S R Beebeejaun

M T Sachak

REMUNERATION AND NOMINATIONS COMMITTEE

E N Mushayakarara (Chairman)

M P Mahlangu

A S Ndlovu

FINANCE AND INVESTMENT COMMITTEE

M T Sachak (Chairman)

K Matsheza

A F Nhau

A S Ndlovu

SUSTAINABLE DEVELOPMENT COMMITTEE

K Matsheza (Chairman)

L P Chihota

J L Nixon

MANAGEMENT

CHIEF EXECUTIVE OFFICER: A S NdlovuBSc Chemical Engineering (UK), Post, Graduate Diplomain Marketing (IMM(SA)), Dip Mgt Dev (UNISA).

CHIEF FINANCIAL OFFICER:B NkomoCA(Z), CA(SA), B Comm – Acc, B Compt (Hons).

MANAGER-HUMAN RESOURCES & EXTERNAL AFFAIRS: J NjanikeBSc Economics, IPMZ, LCCI Mgt, MBA.

MANAGER-HEALTH, SAFETy & ENVIRONMENT:A ChimutandaB Tech Env Health (SA), HND Env Health

GENERAL MANAGER-EMPRESS NICKEL REFINERy: C KariwoBSc Metallurgy (UK), Dip Mgt Dev (UNISA)

GENERAL MANAGER-RENCO MINE: C KachisaAdvanced Diploma in Mining Technology, Mine Manager Diploma, Trainer Development Diploma

GENERAL MANAGER- TECHNICAL SERVICES: L MandaBSc, MSc Exploration Geology (UZ), MBA (NUST), PrSciNat

GENERAL COUNSEL: S OmarshahBL, LLB (Hons) (UZ), LLM (Camb)

COMPANy SECRETARyRioZim Management Services (Pvt) Ltd

P A G E


Board Of Directors and Executives

Mr E. N. MushayakararaChairman of the Board ofDirectors

Mr J. L. NixonDeputy Chairman

Mr M. T. SachakNon Executive Director

Mr A. F. NhauNon Executive Director

Mr S. R. BeebeejaunNon Executive Director

Mr M. P. MahlanguNon Executive Director

Mr K. MatshezaNon Executive Director

Mr A. S. NdlovuChief Executive O�cer

Mr B. Nkomo CA (Z), CA (SA)Chief Financial O�cer

Ms S. OmarshahGeneral Counsel

Mr L. P. ChihotaNon Executive Director


RIOBASEMETALSComprises Empress Nickel Refinery which is symbolic of RioZim’s journey from inception in 1956. Currently RioZim’s best performer contributing over 70% of revenue. Expansion plans to triple its capacity to 45 000mt per year are under way.

R I O Z I M L I M I T E D A N N U A L R E P O R T 2 0 1 3P A G E 9


“ENR has become the

largest exporter of

beneficiated mineral

products in Zimbabwe.”

Elisha. N. Mushayakarara(BOARD CHAIRMAN)

Chairman’s Statement


Introduction

The Group operated under challenging conditions characterised by lower revenue resulting from an approximate 30% decline in international commodity prices and expensive financing costs. The disruption at Renco in January and February 2013 cost the company $4.5 million in lost revenue and cash.

Economic Overview

The economy continues to operate sub-optimally mainly because of liquidity constraints and minimum foreign direct investments. This, coupled with the lack of suitable lines of credit and a fragile banking sector resulted in limited economic activity. I would, however, like to acknowledge the support rendered by the banks in spite of the limited resources at their disposal. I would also like to acknowledge the support given by regional institutions such as Afrexim Bank who have continued to support the revival of the Zimbabwean economy. Corporates, however, continue to remain under pressure due to high interest rate burdens which in the main averaged about 20% per annum. Inflation remained low at 0.33% on an annualised basis.

The Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset) document launched during the period under review has all the necessary and correct ingredients. What is urgently required is to put in place a serious implementation program. If Zim Asset is to be a success we need undoubted commitment on the part of the implementers. More importantly, we need to effectively re-engage the international community.

The national gold output declined 6.02% after the closure of some mines due to unsustainably high extracting costs against the background of declining gold prices. RioZim has continued to focus on the cost cutting measures whose success has helped the company to continue operating.

Financial Performance

The Group’s revenue grew by 46% over last year and an operating profit of $2.1 million was recorded. This profit fell short of the $4.6 million achieved in the comparative period mainly due to the decline in global metal prices. A net finance cost of $9.7 million (2012: $11.8 million) reversed the operating profit to a loss for the year of $4.7 million (2012: $5.5 million).

Empress Nickel Refinery (ENR) recorded a growth in turnover of 132% from $34 million in 2012 to $79 million in 2013. The growth in revenue was largely driven by the change in the ENR business model from toll-refining to own production. This business unit has since become the largest exporter of beneficiated mineral products in Zimbabwe. The operation traded profitably in 2013 even though the margins were negatively affected by high electricity tariffs and stop and start costs resulting from inconsistent liquid oxygen supply, which was addressed by the purchase and installation of a new oxygen plant, commissioned in November 2013. The new plant produces oxygen at a significant cost saving. The reverts project was concluded, though, at much lower revenues than anticipated due to falling metal prices.

Renco achieved a slightly more than break-even operating profit. The decline in gold prices together with the disturbances experienced in the first quarter affected the momentum of this business even though the operation remains a strategic asset for the Group. The cost cutting measures that commenced in 2012 afforded the Renco business continuity in the face of collapsing gold prices.

The decline in metal prices hampered the Group’s ability to service its debt at the rate that was planned. Bank facilities were renewed, even though capital repayments were made at a slower rate than expected by the financial institutions. An approach is being worked on that will provide a long lasting solution to all lenders.

The performance of the Group’s associate, Murowa Diamonds (Private) Limited, improved significantly on the back of a 24% increase in price per carat partially attributable to an improvement in quality. A share of profit from the associate of $823 000 (2012: loss of $267 000) was posted.

Chairman’s Statement(Cont)


Outlook

The Group continues to pursue growth through increased productivity at a lower cost. To this end, $3.3 million was invested in capital improvements, mainly at ENR, which were completed in the first quarter of 2014.

As mentioned in my last report, a new mining operation based on the Cam & Motor ore bodies is on course, with the design and manufacturing of the plant for the operation having commenced. The Engineering Procurement and Construction Contract was recently signed and the Group has every reason to believe that the operation will be on course to start production in the second half of 2014. Given that the mine was historically Zimbabwe’s largest gold producing mine, Cam & Motor should be an excellent addition to the Group’s operating portfolio.

The Group’s restructuring is on course and the successful completion of this exercise will enable capital to be raised at subsidiary level whilst remaining an indigenous entity. The funds raised will be used to finance some of the Group’s exciting projects in the pipeline.

Sustainability

RioZim Foundation launched a new platform for collaboration with government, business, the diplomatic community, donors, educational institutions and NGO’s to bring sustainable development to communities across Zimbabwe. Under a new Executive Director, the Foundation is uniquely placed to provide a bridge between communities and potential development partners. The RioZim Foundation’s vision continues to be to create, develop and promote collaborative sustainable development programmes and make measurable social impact on the lives of the people in Zimbabwe. In 2014, the RioZim Foundation will build upon a 40 year legacy of hard work and success to forge strategic partnerships for the future. The Foundation aims to be the “Partner of Choice” in the implementation of development programmes in education, food production and health in Zimbabwe.

Directorate

Dr S H S Makoni, Mr. T P B Mpofu and Mr. R M Tait resigned from the Board with effect from December 4, 2013. I would like to thank them for their valuable contribution to the Group and wish them well in their future endeavours.

I welcome to the board Mr. M T Sachak and Mr. L P Chihota, who each add a wealth of experience and expertise to the Board.

Appreciation

I wish to extend my gratitude to the rest of the Board for their continued guidance, commitment and tireless effort in directing the company forward during what has proved to be a demanding financial year.

I also wish to thank management, staff and other stakeholders for their selfless support during the period.

E N Mushayakarara Board Chairman

20 March 2014

Chairman’s Statement(Cont)

P A G E


Oxygen PlantThe newly commissioned oxygen plantat Empress Nickel Refinery.



“Cam & Motor Mine is

capable of producing at

least 3 000 ounces per

month.”

Ashton. S. Ndlovu(CHIEF EXECUTIVE OFFICER)

Chief Executive Officer ’s Review


Chief Executive Officer ’s Review (Cont)

Operating Environment

The operating environment remained challenging in 2013 as evidenced by the widespread scale down of operations across the economy. The economic growth momentum markedly slowed down to 3.4% (2012: 10.6%) impeded by the following factors: • persistent liquidity challenges. • erratic power supply and escalating utility costs. • limited long term capital investments due to the continued perceived high country risk premium. • uncertainty in key policies such as the Indigenisation and Economic Legislation. • declining commodity prices. • high cost of borrowings.There is however general hope that the full implementation of the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset) blueprint, as well as the government’s efforts to curb revenue leakages in the mining sector, will bring a much-needed growth impetus to the economy. The government’s effort to seek re-admission to the London Bullion Market (LBM) is further expected to aid the recovery of the country’s gold sector.

OPERATIONS REVIEW

Overview

The Group experienced a challenging start to 2013 with both operations being brought to a standstill at the beginning of the first quarter. Renco Mine lost in excess of one month’s production due to an illegal occupation, which was successfully resolved through the courts, whilst production at Empress Nickel Refinery (ENR) was affected by a force majeure that was declared by its sole matte supplier. These unfortunate events occurred as the global metal prices fell unexpectedly. Therefore, not only did the Group lose production in the first quarter, it was also unable to sell at the prices planned and had to revise the forecasts down for the rest of the year.

In order to remain viable the Group had to intensify the cost cutting initiatives which had commenced in 2012. The installation of an oxygen plant at ENR was one such initiative. The plant was commissioned in November 2013 and is expected to result in cost savings of approximately $300 000 per month at optimum production levels.

Safety, Health and Environment

The Group’s safety record improved in 2013 with 9 Lost Time Injuries (LTI’s) compared to 17 in 2012. The fatality record remained at zero.

National Tree Planting day was commemorated at Renco Mine on December 7, 2013 with 630 trees planted.

During 2013, ENR achieved re-certification to ISO 9001:2008, guaranteeing the Group’s membership on the London Metal Exchange (LME) for the next three years.

Renco Gold Mine

The operation’s performance was affected by the previously mentioned disturbances in the first quarter, a decline in gold prices and rain induced power faults. Ore hoisted declined 5% from 221 590 tonnes in 2012 to 210 447 tonnes in 2013. Despite the improved plant recoveries there was a drop in the average grade from 3.51g/t last year to 3.32 g/t in 2013. The above factors resulted in a decrease in gold produced in 2013 to 613 kgs from 679 kgs recorded in 2012.



The reconciliation of ore reserves and resources at Renco Gold Mine as at 31 December 2013 was as follows:

SUMMARy Tonnes Grade (g/t) Content (kg)Proved ore reserves as at 1 January 2013 24 260 3.26 79Plus developed during the year 13 140 6.66 87Plus moved from probable reserves 11 700 11.19 131Less depleted by mining during the year (20 680) 5.57 (115)Less written off (14 810) 8.33 (123)Proved ore reserves as at 31 December 2013 13 610 4.32 59 Probable ore reserves as at 1 January 2013 381 060 4.74 1 808Plus developed during the year 47 370 6.07 288Plus transferred after re-evaluation 1 084 210 6.99 7 579Less depleted by mining during the year (37 660) 6.18 (233)Less written off (137 770) 3.93 (541)Less moved to proved reserves (11 700) 11.19 (131)

Probable ore reserves as at 31 December 2013 1 325 510 6.62 8 770Total Mineral Reserves as at 31 December 2013 1 339 120 6.59 8 828

Measured mineral resources as at 31 December 2012 161 070 5.15

Measured mineral resources as at 31 December 2013 143 980 5.38

Inferred mineral resources as at 31 December 2012 1 071 950 6.63 Inferred mineral resources as at 31 December 2013 4 500 000 6.92

The proved ore reserve base reduced by 44% due to lack of development as a result of funding constraints. During the year a review of the resources resulted in 1 084 210 tonnes being transferred to probable reserves.

The proved reserves consist of adequately defined blocks which can be mined, while probable reserves consist of blocks which are less well defined and some remnants which remained as stope faces progressed. All probable blocks require further development and sampling prior to mining. The mine is reviewing its resource estimations with the help of external consultants. The mine has undertaken geological reinterpretations of the licence area. The reinterpretation indicates that the reefs are continuous beyond current mining limits as evidenced by the reef intersections in the historically drilled holes. Four targets have been delineated and some of these are close to current working areas. The resources from some of these targets have been classified as inferred resources. As financial resources become available, the mine will upgrade part of its mineral resources to reserves status through a targeted rolling five year exploration and development plan. Additionally, an injection of capital for development will accelerate the generation of additional reserves at higher grades than currently being mined.

Empress Nickel Refinery

This operation has become the single largest exporter of beneficiated mineral products in Zimbabwe. Empress Nickel Refinery (ENR) continues to reap the benefits of it’s termination of the loss-making refining deal with Centametal, in favour of an own refining arrangement. The operation made a profit in 2013 despite the decline in metal prices. 2013 results were also affected by inadequate and expensive oxygen supplies and disruptions in matte deliveries as a result of the first quarter force majeure by the company’s sole matte supplier.


To this end, investment was made in capital improvements aimed at improving productivity, efficiencies and reducing production costs. These investments were made in the last quarter of 2013 and include the following: • The 20 tonne per day oxygen plant which became operational in November 2013; • An exercise to replace all anodes and titanium blanks, which is still ongoing; • The Programmable Logic Controller (PLC) and Supervisory Control And Data Acquisition (SCADA) upgrades

which were done in the last quarter of 2013; and • Purchase of leach reactor gearboxes as well as other equipment to improve the production efficiencies at

ENR.Once fully installed and operational, these improvements will result in increased throughput from the current 34 tonnes per day to 42 tonnes per day.

Sengwa

Sengwa Mine remained under care and maintenance and therefore no mining activities were carried out during the year. Monitoring of the coal burning in the pit faces and waste dumps is ongoing. No exploration work was done during the year under review, therefore insitu resources remained at 1.36 billion tonnes. The mineral resources are summarised as follows:

Resource Tonnes Stripping Thickness Moisture Ash Sulphur Energy

Category 000’s ratio (m) (%ad) (%ad) (%ad) (MJ/Kgad)

(bcm/t)

Measured 518 696 2.66 21.53 2.57 34.40 0.33 19.57Indicated 513 422 3.20 20.00 3.00 37.20 0.35 18.29Inferred 328 324 6.70 19.70 3.10 38.30 0.33 17.77Total 1 360 442 3.80

Cam & Motor Gold project

Mining Plan

Gold production at the Cam & Motor project has been planned to commence in the second half of the year. A plant with milling capacity of 1 500 tonnes per day has been ordered from China. The operation will initially be an open pit to a depth of 100 metres. This will be followed by a feasibility study to determine whether to deepen the pit to 200m or use underground mining methods.

During the year, independent consultants were engaged to carry out a resource estimate and to produce a 3D block model for the Cam & Motor Gold Project Resources. The mineral resources have been estimated and classified in compliance with the Australian Joint Ore Reserves Committee Code (‘JORC Code’) as follows:


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Estimated Insitu Gold Resources as at 31 December 2013

CATEGORy PARAMETER MOTOR CAM PETROL TOTAL Tonnes 2 963 200 1 005 400 961 700 4 930 300 Grade Au (g/t) 5.0 3.9 4.5 4.7MEASURED Au (kg) 14 960 3 950 4 290 23 200 Ounces 481 000 126 990 137 900 745 890 Tonnes 332 800 481 900 244 700 1 059 400 Grade Au (g/t) 3.0 3.5 3.4 3.3INDICATED Au (kg) 1 000 1 670 820 3 490 Ounces 32 070 53 550 26 490 112 110 Tonnes 90 300 209 500 87 800 387 600 Grade Au (g/t) 2.1 3.6 1.7 2.8INFERRED Au (kg) 190 760 140 1 090 Ounces 6 170 24 460 4 700 35 330 Tonnes 3 386 300 1 696 800 1 294 200 6 377 300 Grade Au (g/t) 4.8 3.8 4.1 4.4TOTALS Au (kg) 16 150 6 380 5 250 27 780 Ounces 519 240 205 000 169 090 893 330

Estimated Dumped Material Resources (remnant tailings) as at 31 December 2013 INFERRED TONNES GRADE AU (G/T) AU (KG) OUNCES199 000 2.55 500 16 300

Total Gold Resources as at 31 December 2013

DUMPED (MOTOR) PARAMETER MOTOR MATERIAL CAM PETROL TOTALS Tonnes 3 386 300 199 000 1 696 800 1 294 200 6 576 300 Grade Au (g/t) 4.8 2.5 3.8 4.1 4.3 Au (kg) 16 150 510 6 380 5 250 28 290 Ounces 519 240 16 300 205 000 169 090 909 630

Exploration and projects

Exploration programmes for greenfield projects will recommence once cash flows permit. Currently, the target has been to identify projects that have a short pay back period, like the Cam & Motor project. The Group continues to seek partnerships with strategic partners in order to fund some of its exciting exploration projects, such as the Kenilworth gold prospect and the Chimakasa ferrous nickel deposits.

Murowa Diamonds (Private) Limited

The company is controlled and managed by Rio Tinto Plc who own 77.8%. The remaining shareholding of 22.2% is owned by RioZim Limited. During the year, Rio Tinto Plc shelved its plans to disinvest from Murowa Diamonds (Pvt) Limited citing that they were unable to find suitable buyers at the right price.


In 2013, Murowa production volumes increased by 3% at the back of improved plant throughput. Carats sold in 2013 were 410 096 compared to 401 049 carats in 2012. The resultant revenue was 24% higher due to stronger prices and better size and quality distribution of the gems.

Human Resources

The labour turnover for 2013 was lower, than the previous year at an average of 1.5% compared to 2.5% in 2012, when there was a wide scale retrenchment. The total workforce was 1 725 in 2013, compared to 1 703 in 2012. The increase was as a result of a recruitment of management trainees in all disciplines for skills training (especially in technical departments where skills shortages persist) and succession planning. During the year RioZim was successfully accredited by the Institute of Chartered Accountants of Zimbabwe (ICAZ) as a registered training office for Training Outside Public Practice (TOPP) programme.

Industrial Relations

The industrial relations climate was punctuated by industrial unrest in the first quarter of 2013 following the illegal takeover of Renco Mine in January 2013. Through dialogue, the Group redressed some of the issues that were of concern to the employees.The second half of the year was relatively calm.

Industry wage increments for 2013 for the NEC employees were pegged at 7% through a negotiated settlement between the Trade Union and the Chamber of Mines. No increments were awarded to the skilled employees’ categories as the Group experienced cash flow constraints resulting from the decline in metal prices and lost production in the first quarter of 2013.

Subsequent to year end

The 2014 year got off to an equally challenging start. Renco Mine was not spared by the heavy rains in the Masvingo and surrounding areas which resulted in flooding of some sections of the mine. The heavy rains also affected the power lines and this resulted in low production in the first quarter. The sole supplier of matte for ENR also faced a challenging start to the year as they struggled to address issues with their smelter waste heat boiler. These problems have since been resolved and the supplier has made some undertakings to increase matte supply going forward.

FUTURE PROSPECTS

A deposit has been paid for the acquisition of the Cam & Motor project gold processing plant. Certain components are now in production and the manufacturers are visiting the site where the plant will be assembled to finalise the structure. At conservative estimates we believe that the mine is capable of producing at least 3 000 ounces per month.

Plans to increase the plant capacity of ENR are progressing well and further updates will be provided in due course. The Group continues to explore solutions that will result in a reduction in its interest burden, and discussions are ongoing. The Group restructuring remains on course and will allow additional capital to be raised through the subsidiaries, whilst remaining indigenous.

The Group is keenly following the development around the beneficiation of mineral resources in Zimbabwe, given the opportunities that it presents for ENR to expand its plant to refine base metals concentrates for other players. This expansion can be done at a much lower investment than setting up a new refinery and therefore the Group will continue to explore this opportunity.

A S NdlovuChief Executive OfficerHarare20 March 2014



Consisting of the Group’s investments in the diamond sector. Currently the Group has a 22.2% shareholding in Murowa, a viable and efficient open cast diamond mine. The remaining shares are owned by Rio Tinto Plc. Reserves are estimated at 16.5million tonnes, at average grade of 0.9 carats per tonne.

RIODIAMONDS



MILESTONES IN 2013

• ENR achieved re-certification to ISO 9001:2008.

• ENR participated in both zonal and final first

aid competitions in which they achieved 3rd and

8th position respectively.

• A significant improvement in safety performance

at Renco Mine in 2013. Lost Time Injury Frequency

Rate (LTFR) for 2013 declined to 1.59 (5 LTIs) from

4.22 (13 LTIs) in 2012.

• National Tree Planting day was commemorated at

Renco Gold Mine on December 7, 2013, with 630

trees planted.

• National AIDS Day was commemorated at Renco

Mine on December 3, 2013.

THE ENVIRONMENT

Group objectives

• Reduction of water usage by 20%.

• Reduction of energy usage by 20%.

• Environmental conservation programmes.

• Revegetation of tailings and maintenance of own

nursery.

Performance

• Water usage in 2013 increased by 21.9% against

2012 consumption figures.

• Electricity usage in 2013 decreased by 5.2% from

2012 energy figures.

• The National Tree Planting day was commemorated

at Renco Mine.

Health, Safety and Environment

School Children, Villagers and Renco Mine Employees planting trees at Renco Mine tailings dump on National Tree

Planting Day in 2013.

P A G E


MATERIALS

RAW MATERIAL RENCO ENR HARARE GROUP TOTAL

Ore hoisted (tonnes) 210 447 - - 210 447 Ore milled (tonnes) 210 169 7 165 - 217 334 Coal (tonnes) 170 4 556 - 4 726 Petrol (litres) 74 075 58 478 56 983 189 536 Diesel (litres) 108 812 127 469 51 722 288 003 Lubricants (litres) 3 570 9 660 - 13 230

PRODUCTION RENCO ENR SENGWA GROUP TOTAL

Gold (kg) 613 - - 613 Nickel (tonnes) - 2 845 - 2 845

Copper (tonnes) - 3 360 - 3 360

Base metals production increased by 34% to 6 205 tonnes, from 4 623 tonnes in 2012, due to a more consistent

running of the plant in 2013.

ENERGy

There has been a steady decline in electricity usage across the Group over the past five years.

Health, Safety and Environment (Cont)

RIOZIM GROUP ENERGY CONSUMPTION IN GIGA JOULES (GJ)



ENR electricity usage increased by 25.4% from 124 902 Gj in 2012 to 156 664 Gj in 2013. The increase is attributable to a less

disruptive year of operation in 2013 than in 2012.

Renco energy consumption decreased by 2.5% from 2012 to 2013 due to the disturbances in the first quarter of the year.

ENR ENERGY CONSUMPTION IN GIGA JOULES (GJ

RENCO MINE ENERGY CONSUMPTION IN GIGA JOULES (GJ


Total fresh water usage increased by 21.9%, from 1 334 Megalitres (ML) in 2012 to 1 626 ML in 2013.

Renco Mine water usage increased by 7.25%, from 1 419 ML in 2012 to 1 522 ML in 2013. The increase is due to lower

volumes of recycled water.

RIOZIM WATER CONSUMPTION

RENCO MINE WATER CONSUMPTION



ENR water usage increased by 23.8%, from 84 ML in 2012 to104 ML in 2013, due to stable running of the plant in 2013.

WATER PERMITS

The Zimbabwe National Water Authority (ZINWA) issued water abstraction permits as follows:

Location Number of permits Water Source

Renco One Mtilikwi River

Sengwa One Sengwa River

BIODIVERSITy

Location Habitats restored Strategies Implemented

Renco Renco tailings dam • Rehabilitation of the Renco tailings dam through tree planting.

• Maintenance of nursery seedlings .

ENR WATER CONSUMPTION



EMISSIONS, EFFLUENTS AND WASTES

SULPHUR DIOXIDE

Total SO2 produced increased by 22%, from 742 tonnes in 2012 to 906 tonnes in 2013, due to prolonged plant shut down

in 2012.

CARBON DIOXIDE

Total CO2 produced increased by 27.3%, from 6 633 tonnes in 2012 to 8 443 tonnes in 2013, due to prolonged plant shut

down 2012.

ENR SULPHUR DIOXIDE EMISSIONS

ENR CARBON DIOXIDE EMISSIONS




The Environmental Management Agency (EMA) issued air emission and effluent discharge permits as follows:

Permit Category ENR Renco Sengwa

Red Three Three One

Blue Two Three -

Green - Two -

Yellow - Two -

HAZARDOUS AND NON-HAZARDOUS WASTES

Location Hazardous Hazardous Non-hazardous Non-hazardous Used oils

waste waste waste waste (L)

stored (t) disposed(t) stored (t) disposed(t)

Renco 20 1 36 246 3 570

ENR - 16 - 42 545

ENVIRONMENTAL MANAGEMENT PROGRAMMES

Location Environmental issue Programme

MAJOR ENVIRONMENTAL INCIDENTS

No major environmental incidents were recorded across the Group during 2013 compared to one recorded in 2012.

SAFETy

Objectives

• To reduce Lost Time Injury Frequency Rate (LTIFR) from 2.67 to 1.29.

Performance

• A total of nine lost time injury cases were recorded in 2013 across the Group against 17 recorded in 2012, a decrease of 47%.

• A total of eight medical treatment cases were recorded in 2013 across the Group against ten in 2012, a decrease of 20%.

• A total of ten First Aid cases were recorded in 2013 across the Group against five cases in 2012, an increase of 100%.

Renco The fence at refuse dump and tailings dam was vandalised.

Planting of sisals as live fencing at Renco Mine refuse dump and tailings dam.


The number of lost time injuries declined significantly between 2012 and 2013.

OCCUPATIONAL HEALTH

Objectives

• To maintain occupational health cases at two by the end of December 2013 at Renco Mine and three at ENR.

Performance

• A total of five non lost time occupational health cases were recorded in 2013 across the Group against two recorded in 2012.

NEW OCCUPATIONAL HEALTH CASES By DISEASE

Quarter Total Lung Skin Chemical Physical Infectious Other Trauma Trauma Trauma

Diseases Diseases Disease Diseases Agent Diseases Disease Noise Musc/Skel

Diseases

Q1 2013 3 - - - - - 3 - - -Q2 2013 - - - - - - - - - -Q3 2013 - - - - - - - - - -Q4 2013 2 1 - - - - - 1 - -Total 5 1 - - - - 3 1 - -

HIV AND AIDS• A total of 624 Renco Mine employees were reached during HIV/AIDS education at workplaces in preparation for the

World AIDS Day commemorations.• National AIDS Day was commemorated at Renco Mine on the December 3, 2013.


RIOZIM Lost Time Injuries 2009 - 2013(LTIs)

2009 2010 2011 2012 2013


40 years of giving backAs a proudly Zimbabwean company RioZim is committed to exercising good corporate citizenship through the RioZim Foundation. The Foundation is building on a 40 year legacy which includes the creation of a Bulawayo Technical School in 1975 and its current partnership with Jairos Jiri.

RIOZIMFOUNDATION



Social Performance andLabour Practices

RioZim has long been an exponent of positive contribution to

the development of communities in areas in which the company

operates. RioZim is also committed to improving the livelihoods

and welfare of people within the country at large. RioZim has a

number of activities run by the RioZim Foundation.

THE RIOZIM FOUNDATION

In 1974, the Foundation was established to address the development

needs of the community. The Foundation’s main objective is

to promote sustainable development through education, food

production and health initiatives.

Its major achievements include the Rupike and Tugwane irrigation

systems, RioZim Institute of Agriculture, Zhombe, Mhondoro,

Nyabata and Kwayedza High Schools. The Foundation is also

engaged in microenterprise projects. The RioZim Foundation

continues to engage with communities at various levels addressing

basic needs. Despite limited resources, The RioZim Foundation

continues to support the ongoing projects and has introduced

new projects albeit at a smaller scale.

Seke Sanyati Dam RioZim Foundation Farming and Building Centre

RioZim Foundation Farming and Building Centre


Social Performance andLabour Practices (cont)

The Foundation was rebranded in 2013 and a new Executive

Director was appointed. To enhance the funding of the

Foundation, it was decided that it operates independently. In

this regard, the Foundation will partner with other well wishers

and obtain financial support to roll out its mandate. RioZim will,

however, remain the main financial supporter of the Foundation.

CORPORATE SOCIAL RESPONSIBILITy

The following work was undertaken during the period under

review:

RENCO MINE

The mine assisted the surrounding communities and stakeholders

following requests from local leaders at monthly community

liaison meetings. Assistance given centered on the provision

of clean water, sanitation, education and empowering the local

community. To that end Renco installed new boreholes and

repaired dysfunctional ones in the communities surrounding

the mine. Schools and clinics also received various construction

materials to assist in renovations or repairs of buildings. These

included cement, concrete stones, window panes and door

frames.

The mine has created jobs, directly and indirectly, in and around

its site. It is the mines’ recruitment thrust to employ labour from

the surrounding community. The mine also assisted in the repair

of the gravel roads that lead to it. The mine continues to provide

technical support to the Rupike irrigation scheme.

EMPRESS NICKEL REFINERy (ENR)

ENR continued to offer practical assistance to the Kadoma

community. The engineering department assisted the local

communities in the repairs and maintenance of infrastructure for

the provision of electricity and water respectively. ENR was also

able to render various forms of assistance to local schools. These

included paying of municipality and electricity bills for schools.

Such activities were positively received by the community. The

company received a certificate of appreciation from Chemukute

Secondary School for various forms of assistance rendered during

the year.


LABOUR PRACTICES

The Group continued to review manpower levels to reflect

business activity on the ground. As business activity improved at

both locations, there was need to fill in positions that had been

vacant over the years.

The Group continues with its policy of improving the economies of

the communities in areas that it operates by offering employment

and training to local people.

Social Performance andLabour Practices (cont)

RIOZIM EMPLOYMENT TRENDS


The Directors have pleasure in presenting their report, together with the audited financial statements for the year ended 31 December

2013.

GROUP FINANCIAL RESULTS

By order of the BoardRioZim Management Services (Private) LimitedSECRETARIESPer S Omarshah

Report of the Directors

2013 2012 US$000 US$000

Loss before tax ( 6 822) ( 7 471)Income tax credit 2 157 1 948 Loss after tax ( 4 665) ( 5 523) Total comprehensive loss for the year ( 3 246) ( 4 860) Dividends - -

SHARE CAPITAL

During the year, the authorised share capital remained at $1 124 876 made up of 100 000 000 ordinary shares of US$0.01 each and 1 (one) Special Dividend Share of a nominal value of US$124 875.82.

No new shares were issued during the year (2012: 23 377 000) and the number of shares in issue was 53 362 803 (2012: 53 362 803).

BOARD COMMITTEES

During the year under review the Audit and Risk Committee and the Finance and Investment Committee each met four times. The Remuneration and Nominations Committee and the Sustainable Development Committee met twice.

DIRECTORS FEES

A resolution will be proposed at the Annual General Meeting to approve directors’ fees amounting to $171 000 for the period 1 January 2013 to 31 December 2013, and authorizing the award and payment of fees in the ensuing year.

BORROWING POWERS

In terms of the Company’s Articles of Association, the Company’s borrowings should be limited at any given time to twice the value of the funds that are attributable to the shareholders and any excess should be sanctioned by the Company in General Meeting. An ordinary resolution was passed in the 57th Annual General Meeting (AGM) giving the Directors authority to exceed the borrowing limit, as stipulated in the Company’s Articles, by an additional amount of $10 million, if need arises.

The level of borrowings at the end of the year was adequately covered in this respect. DIRECTORATE

Messrs E N Mushayakarara, S R Beebeejaun and M P Mahlangu who retire by rotation in terms of the Articles of Association of the Company, and being eligible, offer themselves for re-election.

At a Board meeting held on 4 December 2013, Messrs M T Sachak and L P Chihota were appointed to the Board with effect from that date. In terms of the Articles of Association of the Company, they are required to retire from the Board at the Annual General Meeting and being eligible, offer themselves for re-election.

Dr S H S Makoni, Mr. T P B Mpofu and Mr. R M Tait resigned from the Board with effect from 4 December 2013.

AUDITORS

Members will be asked to fix the remuneration for Ernst & Young for the past audit and to confirm their reappointment for the ensuing year.


Corporate Governance

BOARD LEADERSHIP

RioZim Limited has a unitary board of nine directors. Eight directors, including the Chairman, are non-executive. The majority of the

Board comprises of non-executive directors which strengthens objectivity and independent decision making in driving the Group’s

strategy, performance and governance. The Company endeavours to improve its corporate governance systems towards alignment

with voluntary codes such as King III Code of Corporate Governance.

The Board takes overall responsibility for the Company’s success in exercising leadership in directing RioZim to achieve sustainable

growth and act in the best interest of shareholders. The main responsibility of the Board is to support good corporate governance,

strategy formulation and guide policy implementation. On page 37, the directors acknowledge their responsibility for financial reporting.

All directors have full access to management and the Company Secretary for information required to discharge their responsibilities fully

and effectively. The Board meets regularly and meetings are held at least on a quarterly basis. In 2013, there was a total of eight board

meetings. Directors are invited to add items to the agendas for Board meetings.

BOARD COMMITTEES

Strategic to the implementation of governance, the Company has four committees of the Board to ensure that there is a clear allocation

of responsibilities and full discharge of the Board’s duties. Each Committee is governed by its Terms of Reference, as approved by the

Board. The Board also establishes Ad-Hoc Committees as and when deemed necessary. Regular reports of the Committees’ business and

activities are given to the Board and minutes are circulated to all directors. The Committees may obtain independent professional advice

in the satisfaction of its duties at the cost of the Group. All Committees are chaired by Non-Executive Directors.

RioZim LimitedBoard of Directors

Audit and Risk Committee

Finance and InvestmentCommittee

Remuneration andNominations

Committee

SustainableDevelopment

Committee

COMMITTEE COMPOSITION ROLE & RESPONSIBILITIES

Audit and Risk

CommitteeAlbert F. Nhau

(Chairman)

and two Non-Executive

Directors

Meets quarterly to oversee all material aspects of the Company’s financial reporting, control, risk management and audit functions.

The Internal Auditor and External Auditor will normally be in attendance.

After each meeting, the Chairman of the

Committee reports formally to the Board on

its proceedings.


COMMITTEE COMPOSITION ROLE & RESPONSIBILITIES

Elisha N. Mushayakarara

(Chairman),

one Non Executive, and the

Chief Executive Officer.

Kurai Matsheza

(Chairman),

and two Non Executive Directors

Meets not less than three times a year

to review the framework of remunerations

for the Chairman, Deputy Chairman,

Directors, Management and Staff and

make recommendations to the Board.

Responsible for recommending

suitable candidates to the Board for both

executive and non-executive directors

The Committee may seek external

and internal advice on remunerations

design and obtain external and internal

remunerations surveys

Meets not less than twice a year to

ensure that the Group’s Management

has in place the policies, standards,

systems and people required to meet

Group commitment to Sustainable

Development

Reviews the practices and processes

in place regarding communities,

employment, environment, human

rights, land access, occupational health,

political involvement, safety, and

sustainable development

Remunerations and

Nominations Committee

Sustainable Development

Committee

Corporate Governance (cont)

Mustafa T. Sachak

(Chairman),

two Non Executive Directors and

the Chief Executive Officer

Finance and Investment

Committee Meets quarterly to conduct the first

independent and objective line of review

of the financial and investment strategy

and policies in the light of the prevailing

conditions and agreed performance targets.

After each meeting, the Chairman of the

Committee reports formally to the Board on

its proceedings.


Corporate Governance (cont)

Director Main Board Audit and Risk Finance and Sustainable Remuneration and

Committee Investment Development Nominations

Committee Committee Committee

E N Mushayakarara 8/8 * * * 2/2

J L Nixon 6/8 * * 2/2 *

A S Ndlovu 7/8 * * 1/2 2/2

A F Nhau 7/8 4/4 4/4 * *

S H S Makoni ^ 5/7 * * * *

K Matsheza 8/8 * 4/4 2/2 *

T P B Mpofu ^ 5/7 * 2/3 * *

S R Beebeejaun 4/8 3/4 * * *

R M Tait 5/7 3/3 3/3 * *

M P Mahlangu 8/8 * * * 2/2

* not a member

^ resigned before the last quarter meetings

MECHANISMS FOR PUBLIC STAKEHOLDER’S COMMUNICATION WITH THE BOARD

The principles of balanced reporting, understandability, openness and substance over form are the foundation for communication to

the public and shareowners. Positive and negative aspects of both financial and non-financial information are provided. RioZim meets

regularly with institutional shareowners and investment analysts. RioZim also makes presentations to investors and analysts biannually,

after the release of results.

CODE OF ETHICS

Directors and employees are required to maintain the highest ethical standards as outlined in the Group’s Code of Ethics, to ensure

that business practices are conducted in a manner which in all reasonable circumstances is above reproach. The Code of Ethics clearly

outlines the Group’s Vision, Mission, Values and Code of Ethics. All employees including senior management, executives and directors,

are expected to act in line with the Code of Ethics at all times. The effectiveness of the systems of internal control in operation is

monitored continually through reviews and reports from senior executives and the internal and external auditors. All directors are

required to declare interests which might be deemed in conflict with their appointment with the Company. All employees are required

to obtain written permission in respect of any activity which has or may result in a conflict of interest. Directors are also required to

declare all other directorships they may hold.

Board Attendance (From 1 January 2013 to 31 December 2013)

Attendance at Board meetings is crucial to the Company’s governance structure and ensures that the Board benefits from each of the

director’s expertise. Below demonstrates the attendance of Board members during the period under review:


Responsibility

The directors of RioZim Limited are responsible for the preparation of the annual financial statements and related information contained in this report. The financial statements are required by the law and the International Financial Reporting Standards (IFRS) to present fairly the financial position of the Group and the performance for that period. In preparing these financial statements, the directors are required to: • select suitable accounting policies and consistently apply them; • make judgments and estimates that are reasonable and prudent; • state whether applicable accounting standards have been followed; and • make an assesment of the Group’s ability to continue as a going concern.

The directors are also responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that its financial statements comply with the Companies Act [Chapter 24:03]. They are also responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Compliance with the Companies Act and ZSC Listing Requirements

These financial statements, which have been prepared under the historical cost convention, are in agreement with the underlying books and records and have been properly prepared and comply with the disclosure requirements of the Companies Act [Chapter 24:03] and the Zimbabwe Stock Exchange Listing Requirements.

Compliance with International Financial Reporting Standards (IFRS)

In preparing the accompanying financial statements, International Financial Reporting Standards have been followed and suitable accounting policies have been used and applied consistently.

Going Concern

The directors have reviewed the Group’s budget and cash flow forecast for the 12 months to December 2014. On the basis of the review of the operating forecasts and in light of the current financial position and existing borrowing facilities, the directors are satisfied that RioZim Limited is a going concern and have continued to adopt the going concern basis in preparing the financial statements.

Significant assumptions and estimates

The directors believe that reasonable and prudent judgments and estimates have been made in the preparation of the financial statements.

The financial statements for the 12 months ended 31 December 2013, which appear on pages 42 to101, have been approved by the Board of Directors and are signed on their behalf by:

E N Mushayakarara A S NdlovuBoard Chairman Chief Executive Officer

Harare20 March 2014

Directors’ responsibilityfor Financial Reporting


Direct & Indirect Shareholding For Directors

As at 31 December 2013

Director’s Name No. of Shares as at 31 December 2013

J L Nixon 1 601

As at 31 March 2014

Directors Name No. of Shares as at 31 March 2014

J L Nixon 1 601


RIOENERGYSengwa Mine: the Sengwa Coal Deposit is situated in north western Zimbabwe, 450km from Harare, with proven ore reserves in excess of 525million tonnes. The Power Station project to be implemented over the next ten years based on resource of 1.3billion tonnes capable of generating power of up to 2 400MW.



A member firm of Ernst & Young Global Limited.

Ernst & Young Chartered Accountants (Zimbabwe) Registered Public Auditors Angwa City Cnr Julius Nyerere Way Kwame Nkrumah Avenue P.O. Box 62 or 702 Harare Zimbabwe

Tel: +263 4 750905 -14 or 750979-83 Fax: +263 4 750707 or 773842 Email: [email protected] www.ey.com



Note 2013 2012 US$000 US$000

Revenue 6 105 682 72 383 Cost of sales (84 402 ) (47 428 )

Gross profit 21 280 24 955

Distribution and selling costs (198 ) (1 718 )Administrative expenses 7 (21 338 ) (19 230 )(Loss)/Gain on disposal of property, plant and equipment 7 (1 ) 180 Write off of buildings 7 - (66 )Other income 9 2 361 518 Operating profit 2 104 4 639

Net finance costs (9 749 ) (11 843 )Finance revenue 10 127 27 Finance costs 11 (9 876 ) (11 870 )Share of profit /(loss) of an associate 12 823 (267 )

Loss before tax (6 822 ) (7 471 )

Income tax credit 13 2 157 1 948

Loss for the year (4 665 ) (5 523 )

Other comprehensive income Other comprehensive income to be reclassified to profit or loss insubsequent periods:Fair value gain on available -for- sale investment 17 15 129 Income tax effect on other comprehensive income (3 ) (6 )Net other comprehensive income to be reclassified to profit orloss in subsequent periods 12 123

Other comprehensive income not to be reclassified to profit or loss:Re-measurement gains on defined benefit plans 26 1 407 540 Net other comprehensive income not to be reclassified to profit or loss in subsequent periods 1 407 540

Total comprehensive income for the year, net of tax 1 419 663

Total comprehensive loss (3 246 ) (4 860 )

Loss for the year attributable to:Owners of the parent (4 561 ) (5 512 )Non-controlling interests 22 (104 ) (11 )

(4 665 ) (5 523 )Total comprehensive loss attributable to:Owners of the parent (3 142 ) (4 849 )Non-controlling interests 22 (104 ) (11 ) (3 246 ) (4 860 )

Loss per share:Basic 14 (8.55 ) (12.10 )Diluted 14 (8.55 ) (12.10 )Headline 14 (8.55 ) (12.36 )Diluted Headline 14 (8.55 ) (12.36 )

Statement Of Comprehensive Income

for the year ended 31 December 2013


Statement Of Financial Position

as at 31 December 2013

Group Company Note 2013 2012 2013 2012 US$000 US$000 US$000 US$000

ASSETS

Non current assetsProperty, plant and equipment 15 34 940 34 566 34 788 34 400 Exploration, evaluation and development assets 16 14 238 13 540 13 511 12 813 Investment in subsidiaries 17.2 - - 166 166 Investment in associate company 12 5 842 5 019 8 041 8 041 Available for sale investments 17.1 193 147 193 147 Deferred tax assets 13 5 804 5 101 5 783 5 082 Total non-current assets 61 017 58 373 62 482 60 649

Current assetsInventories 18 52 928 43 010 52 928 43 010 Trade and other receivables 19.1 3 910 16 103 4 896 16 789 Derivative financial assets 19.2 1 375 - 1 375 -Cash and cash equivalents 20 669 1 034 669 1 034 Total current assets 58 882 60 147 59 868 60 833 Total assets 119 899 118 520 122 350 121 482

EQUITy & LIABILITIES

Shareholders’ equityShare capital 21.1 659 659 659 659 Share premium 21.1 11 600 11 600 11 600 11 600 Available for sale reserve 21.2.1 135 123 135 123 Other reserves 21.2.2 133 133 133 133 Retained earnings 21.2.3 7 743 10 897 10 480 14 339 Equity attributable to equity holders of the parent 20 270 23 412 23 007 26 854 Non-controlling interests 22 ( 425) ( 321) - - Total equity 19 845 23 091 23 007 26 854

Non-current liabilitiesInterest bearing loans and borrowings 23 17 640 8 570 17 640 8 570 Provisions 24 154 119 154 119 Deferred tax liabilities 13 1 427 2 878 1 407 2 812 Employee benefit liabilities 26 230 1 501 230 1 501 Long term payables 25.2 4 611 4 611 4 611 4 611 Total non-current liabilities 24 062 17 679 24 042 17 613

Current liabilitiesTrade and other payables 25 44 861 32 941 44 452 32 488 Income tax liabilities 25.1 282 282 - - Interest-bearing loans and borrowings 23 30 849 44 527 30 849 44 527 Total current liabilities 75 992 77 750 75 301 77 015Total liabilities 100 054 95 429 99 343 94 628 Total liabilities and shareholders’ equity 119 899 118 520 122 350 121 482

These financial statements were approved by the Board of Directors on 20 March 2014 and signed on their behalf by:

E. N. Mushayakarara A. S. NdlovuCHAIRMAN CHIEF EXECUTIVE OFFICER

Harare20 March 2014


Group Attributable to equity holders of the parent

Available Non-

Share Share for sale Other Retained controlling Total

capital premium reserve reserve earnings Total interests equity

US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000

Balance as at 1 January 2012 425 500 - - 15 869 16 794 (310) 16 484

Loss for the year - - - - (5 512 ) (5 512 ) (11) (5 523 )

Other comprehensive income - - 123 - 540 663 - 663

Total comprehensive income - - 123 - (4 972 ) (4 849 ) (11 ) (4 860 )

Issued share capital 234 11 543 - - - 11 777 - 11 777

Convertible debentures - - - 133 - 133 - 133

Transaction costs - (443 ) - - - (443 ) - (443 )

Balance as at 31 December 2012 659 11 600 123 133 10 897 23 412 (321 ) 23 091

Loss for the year - - - - (4 561 ) (4 561 ) (104 ) (4 665 )

Other comprehensive income - - 12 - 1 407 1 419 - 1 419

Total comprehensive income - - 12 - (3 154 ) (3 142 ) (104 ) (3 246 )

Balance as at 31 December 2013 659 11 600 135 133 7 743 20 270 (425 ) 19 845

Company

Available

Share Share for sale Other Retained Total

capital premium reserve reserve earnings equity

US$000 US$000 US$000 US$000 US$000 US$000

Balance as at 1 January 2012 425 500 - - 19 386 20 311

Loss for the year - - - - (5 587) (5 587 )

Other comprehensive income - - 123 - 540 663

Total comprehensive income - - 123 - (5 047 ) (4 924 )

Issued share capital 234 11 543 - - - 11 777

Convertible debentures - - - 133 - 133

Transaction costs - (443 ) - - - (443 )

Balance as at 31 December 2012 659 11 600 123 133 14 339 26 854

Loss for the year - - - - (5 266 ) (5 266 )

Other comprehensive income - - 12 - 1 407 1 419

Total comprehensive income - - 12 - (3 859 ) (3 847 )

Balance as at 31 December 2013 659 11 600 135 133 10 480 23 007

Statement Of Changes in Equity



Note 2013 2012 US$000 US$000

Cash flows from operating activities

Operating profit 2 104 4 639

Adjustments to add/ (deduct) non-cash items:

Depreciation 7 1 887 2 530

Amortisation on capital development 16 330 -

Loss/(Gain) on disposal of property, plant and equipment 7 1 (180 )

Write off of land and buildings 7 - 66

Unrealised exchange gains 9 (599 ) (165 )

Unwinding of discount on rehabilitation provision 11 1 -

Unrealised gains on fair value on derivative financial assets (1 375 ) -

Working capital adjustments:

Change in inventories ( 9 918 ) ( 16 176 )

Change in trade and other receivables 12 193 933

Change in trade and other payables 11 920 15 741

Net cash flows from operating activities 16 544 7 388

Cash flows from investing activities

Investment in exploration, evaluation and development assets 16 (1 028 ) (1 421 )

Acquisition on property, plant and equipment 15 (2 262 ) (479 )

Purchase of investments 17 (31 ) -

Proceeds on disposal of property, plant and equipment - 1 311

Interest received from investing activities 10 127 27

Net cash used in investing activities (3 194 ) (562 )

Cash flow from financing activities

Proceeds from issue of shares 20.1 - 11 776

Transaction costs on issue of shares 20.1 - (443 )

Inflows from borrowings 1 574 12 219

Repayment of borrowings (6 182 ) (17 816)

Interest paid (9 107 ) (11 870 )

Net cash used in financing activities (13 715 ) (6 134)

Net (decrease )/increase in cash and cash equivalents (365 ) 692

Cash and cash equivalents, beginning of period 1 034 342

Cash and cash equivalents at 31 December 20 669 1 034

Statement Of Cash Flows



Notes To TheFinancial Statements


1. GENERAL INFORMATION

RioZim Limited (‘the Company’) and its subsidiaries (together ‘the Group’) are involved in mining and metallurgical operations in different locations in Zimbabwe. The Group has mining operations and a metallurgical plant.

The Company is a limited liability company incorporated and domiciled in Zimbabwe. The address of its registered office is 1 Kenilworth Road, Highlands, Harare.

The Company is listed on the Zimbabwe Stock Exchange. These consolidated financial statements were authorised for issue by the Board of Directors on 20 March 2014.

The principal accounting policies applied in the preparation of these consolidated and company financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 BASIS OF PREPARATION

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The consolidated financial statements are based on statutory records that are maintained under the historical cost convention as modified by the measurement of certain financial assets at fair value.

The consolidated and company financial statements are presented in United States Dollars and all values are rounded to the nearest thousand ($000), except where otherwise indicated.

2.2 BASIS OF CONSOLIDATION

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2013. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Specifically, the Group controls an investee if and only if the Group has all of the following: • Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the

investee); • Exposure, or rights, to variable returns from its involvement with the investee; and • The ability to use its power over the investee to affect its returns. When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and

circumstances in assessing whether it has power over an investee, including: • The contractual arrangement(s) with the other vote holders of the investee; • Rights arising from other contractual arrangements; • The Group’s voting rights and potential voting rights; The Board re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or

more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of Other Comprehensive Income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group

loses control over a subsidiary, it:

• Derecognises the assets (including goodwill) and liabilities of the subsidiary; • Derecognises the carrying amount of any non-controlling interest;


2.2 BASIS OF CONSOLIDATION (CONTINUED)

• Derecognises the cumulative translation differences recorded in equity; • Recognises the fair value of the consideration received; • Recognises the fair value of any investment retained; • Recognises any surplus or deficit in profit or loss; and • Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or

retained earnings, as appropriate.

2.3 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES

(a) Consolidation

(i) Business combinations, including subsidiaries and goodwill

Subsidiaries are entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any Non-Controlling Interest (NCI) in the acquiree. For each business combination, the Group elects whether to measure the NCI in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. As part of a business combination, the Group assesses whether there are any operating lease contracts of the acquiree that may be onerous - that is, where the lease premiums being paid on that contract exceed the current market rate for such lease arrangements. Those mineral reserves, resources and exploration potential that can be reliably measured are recognised separately in the assessment of fair values on acquisition. Other potential reserves, resources and rights, for which fair values cannot be reliably measured, are not recognised separately, but instead are subsumed in goodwill.

If the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value, and any resulting gain or loss is recognised in the statement of profit or loss and other comprehensive income. It is then considered in the determination of goodwill.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IAS 39 Financial Instruments: Recognition and Measurement is measured at fair value, with changes in fair value recognised either in the statement of profit or loss or as a change to other comprehensive income. If the contingent consideration is not within the scope of IAS 39, it is measured in accordance with the appropriate IFRS. Contingent consideration that is classified as equity is not re-measured, and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised

for NCI over the fair value of the identifiable net assets acquired and liabilities assumed. If the fair value of the identifiable net assets acquired is in excess of the aggregate consideration transferred, the Group reassesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in statement of profit or loss and other comprehensive income.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s Cash Generating Units (CGUs) that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Notes To TheFinancial Statements (cont)



2.3 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES (contInued)

(a) Consolidation (continued)

(i) Business combinations, including subsidiaries and goodwill (continued)

Where goodwill forms part of a CGU and part of the operation in that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed of in these circumstances is measured based on the relative value of the disposed operation and the portion of the CGU retained.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered as an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

ii) Transactions and non-controlling interest

The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purpose of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

iii) Investments in associate

An associate is an entity over which the Group has significant influence, generally accompanying a shareholding of between 20% and 50% of the voting rights. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

Under the equity method, the investment in an associate is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate since the acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.

The statement of comprehensive income reflects the share of the results of operations of the associate. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.

The Group’s share of profit of an associate is shown on the face of the statement of comprehensive income. This is the profit attributable to equity holders of the associate and therefore is profit after tax and non-controlling interests in the subsidiaries of the associate.

The financial statements of the associate are prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.





(a) Consolidation (continued)

iii) Investments in associate (continued)

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associate. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the ‘share of profit of an associate’ in profit or loss.

Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

(iv) Interest in joint arrangements

IFRS 11 defines a joint arrangement as an arrangement of which two or more parties have joint control, which is the contractually agreed sharing of control over an arrangement. This exists only when the decisions about the relevant activities (being those that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control.

A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the arrangement.

In relation to its interests in joint operations, the Group recognises its: • Assets, including its share of any assets held jointly; • Liabilities, including its share of any liabilities incurred jointly; • Revenue from the sale of its share of the output arising from the joint operation; • Share of the revenue from the sale of the output by the joint operation; and • Expenses, including its share of any expenses incurred jointly.

The Group has no interest classified as a joint venture.

(v) Investment in subsidiaries

The investments in subsidiaries are accounted for at cost in the Company records.

(b) Foreign currency translation

(i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary

economic environment in which the entity operates (‘the functional currency’). The financial statements are presented in United States of America Dollars (US$), which is the parents functional and presentation currency. RioZim does not have any foreign operations.

ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.





(b) Foreign currency translation (continued)

ii) Transactions and balances (continued) Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date

of the initial transaction. Non-monetary items measured at a revalued amount in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on non-monetary financial assets such as equities classified as available-for-sale are included in the available-for-sale reserve in equity.

(c) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, the initial estimate of the rehabilitation obligation, and for qualifying assets (where relevant), borrowing costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset at cost, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Land and buildings comprise mainly factories and offices. Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

Furniture and fittings 3 - 5 years Motor vehicles 3 - 5 years Plant and equipment shorter of economic life of asset, 9 or 12 years Freehold buildings 100 years

No depreciation is charged when the carrying amounts of items of property, plant and equipment are lower than residual values or when the item has not yet been brought into use (e.g. capital work in progress). The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within (loss) / gain on disposal of property, plant and equipment, in the Statement of Comprehensive Income.

Repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.

Expenditure on major maintenance refits or repairs comprises the cost of replacement assets or parts of assets and overhaul costs. Where an asset, or part of an asset, that was separately depreciated and now written off is replaced, and it is probable that future economic benefits associated with the item will flow to the Group through an extended life, the expenditure is capitalised.

Where part of the asset was not separately considered as a component and therefore not depreciated separately, the replacement value is used to estimate the carrying amount of the replaced asset(s), which is immediately written off. All other day-to-day maintenance and repairs costs are expensed as incurred.




2.3 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES (contInued) (d) Exploration, evaluation and development expenditure

Exploration and evaluation activity involves the search for mineral resources, the determination of technical feasibility and the assessment of commercial viability of an identified resource. The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgment to determine whether future economic benefits are likely, from either future exploitation or sale, or whether activities have not reached a stage that permits a reasonable assessment of the existence of reserves.

Exploration and evaluation activity includes: • Researching and analysing historical exploration data; • Gathering exploration data through geophysical studies; • Exploratory drilling and sampling; • Determining and examining the volume and grade of the resource; • Surveying transportation and infrastructure requirements; and • Conducting market and finance studies.

License costs paid in connection with a right to explore in an existing exploration area are capitalised and amortised over the term of the permit. Once the legal right to explore has been acquired, exploration and evaluation expenditure is charged to profit or loss as incurred, unless the directors conclude that a future economic benefit is more likely than not to be realised. These costs include materials and fuel used, surveying costs, drilling costs and payments made to contractors.

In evaluating whether the expenditures meet the criteria to be capitalised, several different sources of information are used. The information that is used to determine the probability of future benefits depends on the extent of exploration and evaluation that has been performed.

If a project does not prove viable, all irrecoverable costs associated with the project are written off. If an undeveloped project is sold, any gain or loss is included in operating profit, such operations being a normal part of the Group’s activities. When it is decided to proceed with development, any provisions made in previous years are reversed to the extent that the relevant costs are recoverable. Any income earned during the exploration and development phase but before the commencement of commercial operations is included in revenue in the Statement of Comprehensive Income and the remaining exploration and development costs are capitalised.

(e) Impairment of non-financial assets

The Group assesses, at each reporting date, whether there is an indication that an asset or cash generating unit (CGU) may be impaired. If any indication exists, or when annual impairment testing for an asset or CGU is required, the Group estimates the asset’s or CGU’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount (which is the higher of the asset or CGU’s value in use or the fair value less costs of disposal).

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of at least five years.




2.3 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES (contInued) (e) Impairment of non-financial assets (continued)

Impairment losses of continuing operations, including impairment on inventories, are recognised in the statement of profit or loss in expense categories consistent with the function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or has decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss.

(f ) Financial instruments – initial recognition and subsequent measurement

i) Financial assets

The Group’s financial assets include trade and other receivables, derivative financial assets, cash and cash equivalents and available for sale investments.

Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

Classification

The Group classifies its financial assets in the following categories: available-for-sale investments, loans and receivables and financial assets at fair value through profit or loss. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Available-for-sale investments

Available-for-sale investments include equity investments. Equity investments classified as available for sale are those that are neither classified as held for trading nor designated at fair value through profit or loss and which do not comply with the definitions of loans & receivables or held-to-maturity investments.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payment terms that are not quoted in active

markets. They are included in current assets, except for maturities greater than twelve months after the reporting date. These are classified as non-current assets. The Group’s loans and receivables generally relates to “Trade and other receivables and cash and cash equivalents” in the Statement of Financial Position.

Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon

initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments, as defined by IAS 39.The Group has not designated any financial assets at fair value through profit or loss.

This category also applies to the Group’s quotational derivative asset. The ‘quotational period’ is the period after the physical shipment of goods during which the price and grade of minerals sold is subject to change due to fluctuations in commodity prices and also upon testing by the counterparty of the mineral content.




2.3 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES (contInued) (f ) Financial instruments – initial recognition and subsequent measurement (continued)

i) Financial assets (continued)

Recognition and measurement

Initial recognition All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit

or loss, transaction costs that are attributable to the acquisition of the financial asset.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss.

Subsequent recognition

Available for sale investments

After initial measurement, available-for-sale investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the available-for-sale reserve to profit or loss.

Loans and receivables

After initial measurement, loans and receivables are subsequently measured at amortised cost using the effective interest rate (EIR) method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in profit or loss. The losses arising from impairment are recognised in profit or loss.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value presented as finance costs (negative net changes in fair value) or finance revenue (positive net changes in fair value) in the statement of profit or loss and other comprehensive income.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss.

These embedded derivatives are measured at fair value, with changes in fair value recognised in profit or loss. Reassessment occurs only if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or there is a reclassification of a financial asset out of the fair value through profit or loss category.

Derivatives are carried as financial assets when the fair value is positive. Any gains or losses arising from changes in the fair value of derivatives are taken directly to the statement of profit or loss and other comprehensive income.

Commodity contracts that were entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in accordance with the Group’s expected purchase, sale or usage requirements fall within the exemption from IAS 32 and IAS 39, which is known as the ’normal purchase or sale exemption’.

For these contracts and the host part of the contracts containing embedded derivatives, they are accounted for as executory contracts. The Group recognises such contracts in its statement of financial position only when one of the parties meets its obligation under the contract to deliver either cash or a non-financial asset.





i) Financial assets (continued)

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the group’s consolidated statement of financial position) when:

• The rights to receive cash flows from the asset have expired; Or • The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received

cash flows in full without material delay to a third party under a “pass-through” arrangement; and either: (a) the Group has transferred substantially all the risks and rewards of the asset; or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

ii) Impairment of financial assets

The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’), has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment.

Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

The amount of any impairment loss identified is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account were applicable and the loss is recognised in profit or loss. Interest income (recorded as finance income in the statement of profit or loss) continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss.





ii) Impairment of financial assets (continued) If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an

event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.

Available-for-sale investments

For available-for-sale investments, the Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired. In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. The determination of what is ‘significant’ or ‘prolonged’ requires judgment. In making this judgment, the Group evaluates, among other factors, the duration or extent to which the fair value of an investment is less than its cost.

iii) Financial liabilities

Initial recognition and measurement

Financial liabilities in the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, bank advances and loans and borrowings.

Classification

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the statement of profit or loss and other comprehensive income. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial recognition

date and only if the conditions in IAS 39 are satisfied. The Group has not designated any financial liability as at fair value through profit or loss.

Derivatives are carried as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to the statement of profit or loss and other comprehensive income.

Commodity contracts that were entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in accordance with the Group’s expected purchase, sale or usage requirements fall within the exemption from IAS 32 and IAS 39, which is known as the ’normal purchase or sale exemption’.





iii) Financial liabilities (continued)

For these contracts and the host part of the contracts containing embedded derivatives, they are accounted for as executory contracts. The Group recognises such contracts in its statement of financial position only when one of the parties meets its obligation under the contract to deliver either cash or a non-financial asset.

Subsequent measurement

The measurement of financial liabilities depends on their classification as described below:

Loans and borrowings

Loans and borrowings comprise trade and other payables and interest bearing loans and borrowings.

Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities (e.g. long term payable). Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method.

Interest-bearing loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate (EIR) method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in profit or loss.

Fees paid on establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent that there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at

least twelve months after the reporting date.

Derecognition

A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss.

iv) Off-setting of financial assets

Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.




2.3 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES (contInued) (g) Inventories Gold in circuit, nickel and copper in concentrate, metal and minerals in circuit and ore stockpiles are physically measured or

estimated and valued at the lower of cost or net realisable value. Net realisable value is the estimated future sales price of the product the entity expects to realise when the product is processed and sold, less estimated costs to complete production and bring the product to sale.

Cost is determined by using the weighted-average method and comprises direct purchase costs and an appropriate portion of fixed and variable overhead costs, including depreciation and amortisation, incurred in converting materials into finished goods, based on the normal production capacity. The cost of production is allocated to joint products using a ratio of weights at each month end. Separately identifiable costs of conversion of each metal are specifically allocated.

Materials and supplies are valued at the lower of cost or net realisable value. Any provision for obsolescence is determined by reference to specific items of stock. A regular review is undertaken to determine the extent of any provision for obsolescence.

(h) Cash and cash equivalents

Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the Statement of Financial Position.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts.

(i) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax from the proceeds. Where any Group company purchases the company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects is included in equity attributable to the company’s equity holders.

(j) Current and deferred income tax

i) Current income tax

Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.

Current income tax relating to items recognised directly in other comprehensive income or equity is recognised in other comprehensive income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

ii) Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except:




2.3 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES (contInued) (j) Current and deferred income tax (continued)

ii) Deferred tax (continued)

• Where the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

• Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in Other Comprehensive Income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

iii) Value Added Tax (VAT)

Revenues, expenses and assets are recognised net of the amount of VAT except: • Where the VAT incurred on a purchase of assets or services is not recoverable from the tax authorities, in which case the

VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • Receivables and payables that are stated with the amount of VAT included. The net amount of VAT recoverable from, or

payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

(k) Employee benefits

i) Pension and other post-employment benefits

Group companies operate various pension schemes. The schemes are generally funded through payments to insurance companies or trustee-administered funds, determined by periodic actuarial calculations. The Group has both defined benefit and defined contribution plans.

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.




2.3 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES (contInued) (k) Employee benefits (continued)

i) Pension and other post-employment benefits (continued)

A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The cost of providing benefits under the defined benefit plan is determined annually by independent actuaries using the projected unit credit method.

Re-measurements, comprising of actuarial gains and losses, net interest on the net defined benefit obligation or asset are recognised immediately in the statement of financial position with a corresponding debit or credit to retained earnings through Other Comprehensive Income (OCI) in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.

Past service costs are recognised in profit or loss on the earlier of: • The date of the plan amendment or curtailment, and • The date that the Group recognises restructuring-related costs.

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognises the following changes in the net defined benefit obligation under ‘cost of sales’, ‘administration expenses’ and ‘distribution and selling costs’ in consolidated statement of profit or loss :

• Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements.

• Net interest expense or income.

For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Contributions to the National Social Security Authority are also charged to profit or loss as incurred. ii) Termination benefits Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever

an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of when the offer of termination cannot be withdrawn, or when the related restructuring costs are recognised under IAS 37 –Provisions, Contingent Liabilities and Contingent Assets.

Benefits falling due more than twelve (12) months after the reporting date are discounted to their present value.

iii) Profit-sharing and bonus plans The Group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration

the profit attributable to the Company’s shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(l) Provisions

(i) General Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable

that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in profit or loss net of any reimbursement.




2.3 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES (contInued) (l) Provisions (continued)

(i) General (continued) If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects where

appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as part of finance costs in statement of profit or loss and other comprehensive income.

(ii) Rehabilitation provision

The Group records the present value of estimated costs of legal and constructive obligations required to restore mining and other operations in the period in which the obligation is incurred. The nature of these restoration activities includes dismantling and removing structures, rehabilitating mines and tailings dams, dismantling operating facilities, closure of plant and waste sites, and restoration, reclamation and re-vegetation of affected areas.

The obligation generally arises when the asset is installed or the ground/environment is disturbed at the mining operations location. When the liability is initially recognised, the present value of the estimated costs is capitalised by increasing the carrying amount of the related mining assets to the extent that it was incurred as a result of the development/construction of the mine. Any rehabilitation obligations that arise through the production of inventory are expensed when the inventory item is recognised in cost of goods sold. Over time, the discounted liability is increased for the change in present value based on the discount rates that reflect current market assessments and the risks specific to the liability. The periodic unwinding of the discount is recognised in profit or loss as part of finance costs. Additional disturbances or changes in rehabilitation costs are recognised as additions or charges to the corresponding assets and rehabilitation liability when they occur. Costs related to restoration of site damage (subsequent to start of commercial production) that is created on an ongoing basis during production are provided for at their net present values and recognised in profit or loss as extraction progresses.

Changes to estimated future costs are recognised in the statement of financial position by either increasing or decreasing the rehabilitation liability and asset to which it relates if the initial estimate was originally recognised as part of an asset measured in accordance with IAS 16 Property, Plant and Equipment.

(m) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding discounts, rebates, and VAT or duty. The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent and the Group has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements, has pricing latitude and is also exposed to inventory and credit risks.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred, which is considered to occur when title passes to the customer. This generally occurs when product is physically transferred onto a vessel, train, conveyor or other delivery mechanisms.

The following criteria are also applicable to other specific revenue transactions:

i) Gold bullion sales

Revenue from gold bullion sales is brought to account when the significant risks and rewards of ownership have transferred to the buyer and selling prices are known or can be reasonably estimated.

(ii) Nickel, copper and other minerals in concentrate sales

Nickel and copper sales are measured at the price agreed between RioZim and the buyer. Negotiations begin at London Metals Exchange (LME) market prices prevailing on the day.




2.3 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES (contInued) (m) Revenue recognition (continued)

(ii) Nickel, copper and other minerals in concentrate sales (continued)

Contract terms for the Group’s sale of metal in concentrate to third parties allow for a price adjustment based on final assay results of the metal in concentrate by the customer to determine the final content. These are referred to as provisional pricing arrangements, and are such that the selling price for metal in concentrate is based on prevailing spot prices on a specified future date after shipment to the customer (the quotation period). Adjustments to the sales price occur based on movements in quoted market prices up to the date of final settlement. The period between provisional invoicing and final settlement can be between one to six months.

Sales contracts for metal in concentrate that have provisional pricing features are considered to contain an embedded derivative, which is required to be separated from the host contract for accounting purposes. The host contract is the sale of metals in concentrate and the embedded derivative is the forward contract for which the provisional sale is subsequently adjusted. Recognition of sales revenue for these commodities is based on the most recently determined estimate of metal in concentrate (based on initial assay results) and the spot price at the date of shipment. The embedded derivative is initially recognised at fair value, with subsequent changes in the fair value recognised in profit or loss each period until final settlement, and presented as part of revenue. Changes in fair value over the quotation period and up until final settlement are estimated by reference to forward market prices for metals and minerals.

(iii) Rendering of services

Revenue from engineering and analytical laboratory services is recognised by reference to the stage of completion. Stage of completion is measured by reference to labour hours incurred to date as a percentage of total estimated labour hours for each job or contract. When the contract outcome cannot be measured reliably, revenue is recognised only to the extent that the expenses incurred are eligible to be recovered.

(iv) Interest income

For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the statement of profit or loss.

(v) Rental income

Rental income arising from operating leases on property, plant and equipment is accounted for on a straight-line basis over the lease terms and is included in other income in the statement of profit or loss.

(n) Fair value measurement The Group measures derivatives and available for sale assets at fair value at each reporting date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability. • In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.




2.3 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES (contInued) (n) Fair value measurement (continued)

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described, as follows, based on the lowest-level input that is significant to the fair value measurement as a whole:

• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities. • Level 2 — Valuation techniques for which the lowest-level input that is significant to the fair value measurement is

directly or indirectly observable. • Level 3 — Valuation techniques for which the lowest-level input that is significant to the fair value measurement is

unobservable. For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether

transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest-level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

(o) Current versus non-current classification

The Group presents assets and liabilities in statement of financial position based on current/non-current classification.

An asset is current when it is either: • Expected to be realised or intended to be sold or consumed in normal operating cycle. • Held primarily for the purpose of trading. • Expected to be realised within 12 months after the reporting period. • Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after

the reporting period. All other assets are classified as non-current.

A liability is current when either: • It is expected to be settled in the normal operating cycle. • It is held primarily for the purpose of trading. • It is due to be settled within 12 months after the reporting period. • There is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. The Group classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

(p) Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the date of inception. The arrangement is assessed to determine whether fulfilment is dependent on the use of a specific asset (or assets) and the arrangement conveys a right to use the asset (or assets), even if that right is not explicitly specified in an arrangement.




2.3 SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES (contInued) (p) Leases (continued)

Group as a lessee

Finance leases that transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the

minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the income statement.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term. Operating lease payments are recognised as an operating expense in the income statement on a straight-line basis over the lease term.

Group as a lessor

Leases in which the Group does not transfer substantially all the risks and benefits of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

Group has no other leasing arrangements other than operating leases.

(q) Dividend distribution

Dividend distribution to the company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the dividends are approved by the company’s shareholders.

2.4 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES

(a) New and amended standards and interpretations

There were a number of new standards and interpretations, effective from 1 January 2013, which the Group applied for the first time in the current year. None of these standards or amendments required a restatement of previous financial statements. However some of the standards resulted in additional disclosures in the consolidated financial statements.

Below is a discussion of the nature and the impact of the new standards and/or amendments that are relevant for the Group. Other than the changes described below, the accounting policies adopted are consistent with those of the previous financial year.

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine

This interpretation applies to waste removal (stripping) costs incurred in surface mining activity, during the production phase of the mine. The interpretation addresses the accounting for the benefit from the stripping activity. The new interpretation did not have an impact on the Group as the Group does not have surface mining operations.

IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements

IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the issues covered in SIC-12 Consolidation —Special Purpose Entities.

IFRS 10 establishes a single control model that applies to all entities including structured entities (previously referred to as special purpose entities). The changes introduced by IFRS 10 require management to exercise significant judgement to determine which




2.4 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (contInued)

(a) New and amended standards and interpretations (continued)

IFRS 10 Consolidated Financial Statements, IAS 27 Separate Financial Statements (continued) entities are controlled and therefore are required to be consolidated by a parent, compared with the requirements that were in

IAS 27.

The application of IFRS 10 and IAS 27 did not impact the Group’s accounting for its interests in subsidiaries. However, the accounting policy note was updated to reflect the new requirements of IFRS 10 and IAS 27.

IAS 19 Employee Benefits (Revised 2011)

The Group applied IAS 19 (revised 2011) retrospectively in the current period in accordance with the transitional provisions set out in the revised standard. The opening statement of financial position of the earliest comparative period (1 January 2012) has not been presented and the comparative figures have not been restated as there is no quantitative impact on previously disclosed balances. The amendments affect presentation only and have no impact on the Group’s financial position or performance.

Below is a discussion of the changes introduced by IAS 19 (revised) and how the changes affected the Group, where applicable. • All past service costs are recognised at the earlier of when the amendment/curtailment occurs or when the related

restructuring or termination costs are recognised. As a result unvested past service costs can no longer be deferred and recognised over the future vesting period. The Group did not have unvested past service costs and as a result this change did not affect the Group.

• The interest cost and expected return on plan assets used in the previous version of IAS 19 are replaced with a net-interest amount under IAS 19 (revised 2011), which is calculated by applying the discount rate to the net defined benefit liability or asset at the start of each annual reporting period. The change had no quantitative impact on the profit or loss for prior years as the Group has always calculated the interest cost and expected returns using the IAS 19 (revised) principles.

• The distinction between a long term and a short term employee benefit is now based on the expected timing of settlement rather than the date of vesting of the benefit. This change did not affect the classification of the Group’s employee benefits.

• Termination benefits are recognised at the earlier of when the offer of termination cannot be withdrawn or when the related restructuring costs are recognised under IAS 37. Application of this change did not impact the Group.

• IAS 19 (revised 2011) requires more extensive disclosures. These have been provided in Note 26. IAS 19 (revised 2011) has been applied retrospectively, with following permitted exceptions: • Sensitivity disclosures for the defined benefit obligation for comparative period (year ended 31 December 2012) have

not been provided.

IFRS 11 Joint Arrangements and IAS 28 Investments in Associates and Joint Ventures

The application of IFRS 11 and IAS 28 did not impact the Group’s accounting for its interests in joint arrangements because the Group determined that:

• Its joint arrangements that were previously classified as jointly controlled operations were classified as joint operations under IFRS 11. As a result, the Group’s previous methods of accounting for its joint arrangements continue to be appropriate under IFRS 11.

• The accounting policy note was updated to reflect the new requirements of IFRS 11.

IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 sets out the requirements for disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. The requirements in IFRS 12 are more comprehensive than the previously existing disclosure requirements for such investments but will have no impact on the Group’s financial position or performance. IFRS 12 disclosures are provided in Notes 12 and Note 22.




2.4 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (contInued)

(a) New and amended standards and interpretations (continued)

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. IFRS 13 defines fair value as an exit price. As a result of the guidance in IFRS 13, the Group reassessed its policies for measuring fair values — in particular its valuation inputs such as non-performance risk for fair value measurement of liabilities. IFRS 13 also requires additional disclosures.

Application of IFRS 13 has not materially impacted the fair value measurements of the Group. Additional disclosures where required, are provided in the individual notes relating to the assets and liabilities whose fair values were determined.

IAS 1 Presentation of Items of Other Comprehensive Income – Amendments to IAS 1

The amendments to IAS 1 introduce a grouping of items presented in Other Comprehensive Income. Items that will be reclassified (‘recycled’) to profit or loss at a future point in time (e.g., net loss or gain on available for sale financial assets) have to be presented separately from items that will not be reclassified (e.g., revaluation of land and buildings). The amendments affect presentation only and have no impact on the Group’s financial position or performance.

Amendments resulting from Annual Improvements 2010-2012 Cycle (short-term receivables and payables) The IASB clarified in the Basis for Conclusions that short-term receivables and payables with no stated interest rates can be held

at invoice amounts when the effect of discounting is immaterial. This amendment was included in the assessment of the IFRS 13 adoption.

3. STANDARDS ISSUED BUT NOT yET EFFECTIVE

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial statements are disclosed below. These are the changes that the Group reasonably expects will have an impact on its disclosures, financial position or performance when applied at a future date. The Group intends to adopt these standards, if applicable, when they become effective.

IFRS 9 Financial Instruments IFRS 9, as issued, reflects the first phase of the IASB’s work on the replacement of IAS 39 and applies to classification and

measurement of financial assets and financial liabilities, as defined in IAS 39. The standard was initially effective for annual periods beginning on or after 1 January 2013, but Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in December 2011, moved the mandatory effective date to 1 January 2015. The mandatory effective date was later removed.

In subsequent phases, the IASB is addressing hedge accounting and impairment of financial assets. The adoption of the first

phase of IFRS 9 may have an effect on the classification and measurement of the Group’s financial assets but it will not have an impact on classification and measurement of the Group’s financial liabilities. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.

IFRIC Interpretation 21 Levies (IFRIC 21)

IFRIC 21 clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the Interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. IFRIC 21 is effective for annual periods beginning on or after 1 January 2014, with early application permitted. The adoption of IFRIC 21 may have an impact on the Group’s accounting for production and similar taxes, which do not meet the definition of income tax in IAS 12. The Group is still assessing and quantifying the effect.




3. STANDARDS ISSUED BUT NOT yET EFFECTIVE (contInued)

IAS 39 Novation of Derivatives and Continuation of Hedge Accounting – Amendments to IAS 39

These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. These amendments are effective for annual periods beginning on or after 1 January 2014. The Group does not apply hedge accounting.

IAS 32 Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32

These amendments clarify the meaning of “currently has a legally enforceable right to set-off” and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting. These are effective for annual periods beginning on or after 1 January 2014. These amendments are not expected to be relevant to the Group.

IAS 36 - Impairment of Assets (Amendment) - Disclosure requirements for the recoverable amount of impaired assets

The amendments clarify the disclosure requirements about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. The amendments clarify the IASB’s original intention: that the scope of these disclosures is limited to the recoverable amount of impaired assets that is based on fair value less costs of disposal.

These improvements are effective for annual periods beginning on or after 1 January 2014. The amendment did not affect the Group in the current year as no impairment loss was recognised and the Group does also not have any cash generating units to which goodwill has been allocated.

Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)

These amendments are effective for annual periods beginning on or after 1 January 2014 and provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under IFRS 10. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. It is not expected that this amendment would be relevant to the Group, since none of the entities in the Group would qualify to be an investment entity under IFRS 10.

Improvements to IFRSs

In December 2013, the IASB issued two cycles of Annual Improvements to IFRSs that contain changes to nine standards. The amendments are effective from 1 July 2014 either prospectively or retrospectively. A summary of each amendment is described below:

IFRS 3 Business Combinations (Accounting for contingent consideration in a business combination)

Contingent consideration in a business acquisition that is not classified as equity is subsequently measured at fair value through profit or loss whether or not it falls within the scope of IFRS 9 Financial Instruments.

IFRS 8 Operating Segments (aggregation of operating segments and reconciliation of the total of the reportable segment assets to the entity’s total assets)

Aggregation of operating segments

Operating segments may be combined/aggregated if they are consistent with the core principle of the standard, if the segments have similar economic characteristics and if they are similar in other qualitative respects. If they are combined, the entity must disclose the economic characteristics (e.g., sales and gross margins) used to assess whether the segments are ‘similar’.

Reconciliation of the total of the reportable segment assets to the entity’s total assets

The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similar to the required disclosure for segment liabilities.




3. STANDARDS ISSUED BUT NOT yET EFFECTIVE (contInued)

Reconciliation of the total of the reportable segment assets to the entity’s total assets (continued)

The impact of these improvements will be included in the aggregation of the Group’s operating segments and in the reconciliation of segment assets to the entity’s assets.

IAS 16 Property, plant and equipment and IAS 38 Impairment (Revaluation method-proportionate restatement of accumulated depreciation)

The amendment clarifies that revaluation can be performed by adjusting the gross carrying amount of the asset to market

value or by determining the market value of the carrying amount and adjusting the gross carrying amount proportionately so that the resulting carrying amount equals the market value. The amendment also clarified that accumulated depreciation/amortisation is the difference between the gross carrying amount and the carrying amount of the asset (i.e. gross carrying amount – accumulated depreciation/amortisation = carrying amount).

The amendment to IAS 16.35 (b) and IAS 38.80 (b) clarifies that the accumulated depreciation/amortisation is eliminated so that the gross carrying amount and carrying amount equal the market value. The amendment is not expected to have an impact on the Group as it does not have a revaluation policy.

IAS 24 Related party disclosures (Key management personnel)

The amendment clarifies that a management entity – an entity that provides key management personnel services – is a related party subject to the related party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services. The amendment is not expected to have an impact on the Group as no management entity provides key management services.

IFRS 3 Business Combinations (Scope exception for joint ventures)

The amendment clarifies that joint arrangements are outside the scope of IFRS 3, not just joint ventures and the scope exception applies only to the accounting in the financial statements of the joint arrangement itself. The amendment will not affect the Group.

IFRS 13 Fair value measurement (Portfolio exception)

The amendment clarifies that the portfolio exception in IFRS 13 can be applied to financial assets, financial liabilities and other contracts.

4. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the consolidated financial statements. Estimates and assumptions are continually evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

In particular, the Group has identified the following areas where significant judgments, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the financial statements.

(a) Going concern

The directors assess the ability of the Group to continue as a going concern at the end of each financial year. The assessment involves making assumptions in the budgets and forecasts. Refer to note 33.




4. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (contInued)

(b) Ore reserve and mineral resource estimates

Ore reserves are estimates of the amount of ore that can be economically and legally extracted from the Group’s mining properties. The Group estimates its ore reserves and mineral resources based on information compiled by appropriately qualified persons relating to the geological and technical data on the size, depth, shape and grade of the ore body and suitable production techniques and recovery rates. Such an analysis requires complex geological judgments to interpret the data. The estimation of recoverable reserves is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements and production costs along with geological assumptions and judgments made in estimating the size and grade of the ore body.

The Group estimates and reports ore reserves in line with the principles contained in the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (December 2012), which is prepared by the Joint Ore Reserves Committee (JORC) of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia, known as the “JORC Code.” The JORC Code requires the use of reasonable investment assumptions, including:

• Future production estimates — which include proved and probable reserves, resource estimates and committed expansions.

• Expected future commodity prices, based on current market price, forward prices and the Group’s assessment of the long-term average price.

• Future cash costs of production, capital expenditure and rehabilitation obligations. Consequently, management will form a view of forecast sales prices, based on current and long-term historical average price

trends. For example, if current prices remain above long-term historical averages for an extended period of time, management may assume that lower prices will prevail in the future. As a result, those lower prices would be used to estimate reserves under the JORC Code. Lower price assumptions generally result in lower estimates of reserves.

As the economic assumptions used may change and as additional geological information is produced during the operation of a mine, estimates of reserves may change. Such changes may impact the Group’s reported financial position and results which include:

• The carrying value of exploration and evaluation assets, mine properties, property, plant and equipment, and goodwill may be affected due to changes in estimated future cash flows.

• Depreciation and amortisation charges in profit or loss may change where charges are determined using the useful life of the related assets.

• Provisions for rehabilitation and environmental provisions may change where changes to the reserve estimates affect expectations about when such activities will occur and the associated cost of these activities.

• The recognition and carrying value of deferred income tax assets may change due to changes in the judgments regarding the existence of such assets and in estimates of the likely recovery of such asset.

(c) Exploration and evaluation expenditure

The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgment to determine whether it is likely that future economic benefits are likely, from either future exploitation or sale, or whether activities have not reached a stage that permits a reasonable assessment of the existence of reserves. The determination of a JORC resource is itself an estimation process that involves varying degrees of uncertainty depending on how the resources are classified (i.e. measured, indicated or inferred). The estimates directly impact when the Group defers exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and assumptions about future events or circumstances, in particular, whether an economically viable extraction operation can be established. Estimates and assumptions may change if new information becomes available. If, after expenditure is capitalised, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalised is written off in profit or loss in the period when the new information becomes available.

(d) Depreciation

The Group’s management determines the useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on projected lives of these assets. Estimated economically recoverable reserves are used in determining the depreciation and/or amortisation of mine specific assets. This results in a depreciation/amortisation charge proportional to





(d) Depreciation (continued)

the depletion of the anticipated remaining life of mine production. Each item’s life, which is assessed annually, has regard to both its physical life limitations and present assessments of economically recoverable reserves of the mine property at which the asset is located. These calculations require the use of estimates and assumptions, including the amount of recoverable reserves and estimates of future capital expenditure. Changes in estimates are accounted for prospectively.

(e) Mine rehabilitation provision

The Group assesses its mine rehabilitation provision at each reporting date. Significant estimates and assumptions are made in determining the provision for mine rehabilitation as there are numerous factors that will affect the ultimate amount payable. These factors include estimates of the extent and costs of rehabilitation activities, technological changes, regulatory changes, cost increases as compared to the inflation rates (5% (2012: 5%)), and changes in discount rates (15% (2012: 15%)). These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision at reporting date represents management’s best estimate of the present value of the future rehabilitation costs required.

(f ) Impairment of assets (other than trade and other receivables)

The Group assesses each asset or cash generating unit (CGU) each reporting period to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the higher of the fair value less costs to sell and value in use. These assessments require the use of estimates and assumptions such as long-term commodity prices (considering current and historical prices, price trends and related factors), discount rates, operating costs, future capital requirements, closure and rehabilitation costs, exploration potential, reserves (see Note 4(c) Ore reserves and minerals resource estimates above) and operating performance (which includes production and sales volumes). These estimates and assumptions are subject to risk and uncertainty. Therefore, there is a possibility that changes in circumstances will impact these projections, which may impact the recoverable amount of assets and/or CGUs.

Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. Fair value for mineral assets is generally determined as the present value of estimated future cash flows arising from the continued use of the asset, which includes estimates such as the cost of future expansion plans and eventual disposal, using assumptions that an independent market participant may take into account. Cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset/CGU. Management has assessed its CGUs as being an individual mine site, which is the lowest level for which cash inflows are largely independent of those of other assets/CGUs.

The assumptions made in calculating the value in use include: • A forecast period of five years for ENR and of Life of mine for Renco Mine; • Capacity ultilisation (ENR – 90% to 95%), (Renco -87% to 94%); • Average prices for the next ten years: Gold - $ 1 330 per ounce, Nickel- $14 550 per ton, Copper -$7 000 per ton; • Continuous supply of matte for ENR; • Discount rate of 15% per annum; and • Inflation rate of 5% per annum.

(g) Impairment losses on trade and other receivables

The Group reviews its trade and other receivables to assess impairment on a monthly basis. In determining whether an impairment loss should be recorded in profit or loss, the Group makes judgments as to whether there is an observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of trade and other receivables before the decrease can be identified with an individual receivable in that portfolio. This evidence may include observable data indicating that there has been an adverse change in the payment status of receivables in the company, or national or economic conditions that correlate with defaults in the Group. Management uses estimates based on historical loss experience for assets with credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its cash flows. The methodology and assumptions used for estimating both the amount and timing of future cashflows are reviewed regularly to reduce any differences between loss estimates and actual loss experience.





(h) Recovery of deferred tax assets Judgment is required to determine which types of arrangements are considered to be a tax on income in contrast to an

operating cost. Judgment is also required in determining whether deferred tax assets should be recognised in the statement of financial position. Deferred tax assets, including those arising from unutilised tax losses, require management to assess the likelihood that the Group will generate sufficient taxable earnings in future periods, in order to utilise recognised deferred tax assets. Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. These estimates of future taxable income are based on forecast cash flows from operations (which are impacted by production and sales volumes, commodity prices, reserves, operating costs, closure and rehabilitation costs, capital expenditure, dividends and other capital management transactions) and judgment about the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Group to realise the net deferred tax assets recorded at the reporting date could be impacted. In addition, future changes in tax laws in the jurisdictions in which the Group operates could limit the ability of the Group to obtain tax deductions in future periods.

An assumption has been made that the deferred tax asset will be recovered through restructuring of the Group, which, because of the realisable values of the assets, would result in taxable income being realised on disposal to the newly formed subsidiaries. The market values have been approved by the Board and components of the plan have been implemented.

(i) Inventories

Net realisable value tests are performed at each reporting date and represent the estimated future sales price of the product the entity expects to realise when the product is processed and sold, less estimated costs to complete production and bring the product to sale. Where the time value of money is material, these future prices and costs to complete are discounted. Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained gold ounces is based on assay data, and the estimated recovery percentage is based on the expected processing method. Stockpile tonnages are verified by periodic surveys.

(j) Contingencies

By their nature, contingencies will only be resolved when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgment and the use of estimates regarding the outcome of future events.

(k) Pension benefits

The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.The discount rate used in the actuarial valuation approximates the United States government bond rate plus a country risk premium. Other key assumptions for pension obligations are based in part on current market conditions.

(l) Fair value measurement

The Group measures financial instruments, such as derivatives and available for sale instruments, at fair value at each reporting date. Also, from time to time the fair values of non-financial assets and liabilities may be required to be determined.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Changes in estimates and assumptions about these inputs could affect the reported fair value.





(l) Fair value measurement (continued)

Judgment is required to determine when the Group has joint control, which requires an assessment of the relevant activities and when the decisions in relation to those activities require unanimous consent. The Group has determined that the relevant activities for its joint arrangements are those relating to the operating and capital decisions of the arrangement, such as: the approval of the capital expenditure programme for each year, and appointing, remunerating and terminating the key management personnel or service providers of the joint arrangement. The considerations made in determining joint control are similar to those necessary to determine control over subsidiaries.

Judgment is also required to classify a joint arrangement. Classifying the arrangement requires the Group to assess their rights and obligations arising from the arrangement. Specifically, the following is considered:

• The structure of the joint arrangement – whether it is structured through a separate vehicle; and • When the arrangement is structured through a separate vehicle, the Group also considers the rights and obligations

arising from: The legal form of the separate vehicle; The terms of the contractual arrangement; and Other facts and circumstances (when relevant).

This assessment often requires significant judgment, and a different conclusion on joint control and also whether the arrangement is a Joint Operation or a Joint Venture, may materially impact the accounting. The Group has joint arrangements which are not structured through separate vehicles (i.e. a company structure). Management has assessed that the joint arrangements are joint operations as the parties have rights to the assets and obligations for the liabilities relating to the arrangements.

(n) Life of Mine

Life of Mine reflects design and costing studies of an existing operation in which appropriate assessments have been made of realistically assumed geological, mining, metallurgical, economic, legal, environmental, social, governmental, engineering, operational and all other modifying factors, which are considered in sufficient detail to demonstrate at the time of reporting that extraction is reasonably justified. Life of Mine (years) is based on scheduled proven and probable reserves.

(o) Determination of material partly-owned subsidiaries

The Group holds 50% interest in Sengwa Colliery (Private) Limited which is located in Gokwe North. Tinto Holdings Zimbabwe holds the remaining 50% interest. The Group has the majority representative on the board as well as the management contract.Furthermore, the Group’s approval is required for all operational decisions and based on this, management determined that in substance, the Group controls this entity with Tinto Holdings Zimbabwe constituting the non-controlling interest.






5. OPERATING SEGMENT INFORMATION

Management has determined the Group’s operating segments based on the information reviewed by the board for the purpose

of allocating resources and assessing performance. The revenue, operating profit, assets and liabilities reported to the Board are

measured consistently with that in the reported consolidated financial statements.

Gold segment

This operating segment develops and mines gold that is ultimately sold as gold bullion.

Base Metals

This operating segment comprises of Nickel, Copper and Platinum Group of Materials (PGM’s) producing assets.

The Group management monitors the operating results of its business units separately for the purpose of making decisions

about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or

loss and is measured consistently with operating profit or loss in the consolidated financial statements. However, the Group’s

financing (including finance costs and finance income) and income taxes are managed on a group basis and are not allocated to

operating segments.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

Year ended 31 December 2013 Base Adjustments Gold Metals & eliminations Consolidated US$000 US$000 US$000 US$000

Revenue External customers 27 012 78 656 14 105 682 Inter-segment - - - - Total revenue 27 012 78 656 14 105 682

Results Depreciation (note 1) (1 099) ( 727) (61 ) (1 887 ) Amortisation of development costs (note 1) ( 330) - - ( 330 ) Loss on sale of property, plant and equipment - ( 1) - ( 1 )

Segment profit (note 2) 476 7925 (6 297 ) 2 104 Net finance cost (9 749 ) Share of associate profit 823 Income tax credit 2 157 Net loss for the year (4 665 )

Operating assets (note 3) 31 543 62 372 25 984 119 899 Operating liabilities (note 4) 29 850 59 028 11 176 100 054 Investments in associate - - 5 842 5 842 Other disclosures Capital expenditure (note 5) 1 150 1 990 150 3 290 Notes 1. Represents depreciation of property plant and equipment and amortisation of capital development costs.

2. Profit for each operating segment does not include finance income (US$127 000) and finance costs (US$9 876 000).

3. Segment assets do not include deferred tax assets (US$5 804 000) as these assets are managed on a group basis.

4. Segment liabilities do not include deferred tax liabilities (US$1 427 000), current tax payable (US$282 000) and interest-

bearing loans and borrowings (US$48 489 000) as these liabilities are managed on a group basis.

5. Capital expenditure consists of additions to property, plant and equipment and exploration, evaluation and development

assets.




5. OPERATING SEGMENT INFORMATION (CONTINUED)

Year ended 31 December 2012 Base Adjustments Gold Metals & eliminations Consolidated US$000 US$000 US$000 US$000

Revenue External customers 37 572 34 743 68 72 383 Inter-segment - - - - Total revenue 37 572 34 743 68 72 383

Results Depreciation and amortisation ( note 1) (1 470 ) (727 ) (332 ) (2 529 ) Gain on sale of property, plant and equipment - - 180 180 Write off of buildings - - (66 ) (66 )

Segment profit (note 2) 8 514 4 354 (8 229 ) 4 639 Interest expense (11 843 ) Share of associate loss (267 ) Income tax credit 1 948 Net loss for the year (5 523 ) Operating assets (note 3) 34 302 60 133 24 085 118 520 Operating liabilities (note 4) 25 788 51 794 17 847 95 429

Investments in associates - - 5 019 5 019 Other disclosures Capital expenditure (note 5) 868 91 941 1 900

Notes 1. Represents depreciation of property plant and equipment and amortisation of capital development costs. 2. Profit for each operating segment does not include finance income (US$27 000) and finance costs (US$11 870 000). 3. Segment assets do not include deferred tax assets (US$5 101 000) as these are managed on a group basis. 4. Segment liabilities do not include interest-bearing loans and borrowings (US$53 097 000) as these liabilities are managed on a group

basis. 5. Capital expenditure consists of additions to property, plant and equipment and exploration, evaluation and development assets.

Geographic information and information about major customers All the Group’s operations are located in Zimbabwe, and they are situated in two geographic locations, Masvingo Province and

Mashonaland West Province.

Revenue from one customer in the gold segment amounted to US$24 533 000 (2012: US$36 608 000) and revenue from one customer in the base metals segment amounted to US$47 910 000 (2012: US$ Nil).

Revenues from external customers are based on the locations of the customers: The bulk of the metals are purchased by the European market, and gold mainly by the Fidelity Printers (Pvt) Limited in Zimbabwe

and Rand Refinery in South Africa. 2013 2012 US$000 US$000

Zimbabwe 24 533 36 608 External customers Europe 78 656 34 743 Africa 2 493 1 032 Total revenue per consolidated statement of comprehensive income 105 682 72 383




6. REVENUE 2013 2012 US$000 US$000

Gold 27 012 37 436 Nickel 39 797 4 756 Copper 22 660 6 674 PGM’s 11 511 8 432 Cobalt 397 - Reverts (refined matte containing all above metals) 4 291 5 048 Toll-refining fees - 9 833 Engineering and analytical laboratory services 14 68 Copper concentrates - 136 Total revenue 105 682 72 383

7. OPERATING PROFIT Operating profit is stated after (charging)/ crediting: Employee benefits -Salaries and Wages (7 926 ) (8 973 ) -Pension costs (730 ) (613 ) -Other (972 ) (1 643 ) Retrenchments (560 ) (726 ) Audit remuneration -Current year (27 ) - -Prior year (122 ) (232 ) Exploration and claims costs (196 ) (1 040 ) Directors’ emoluments (171 ) (247 ) Depreciation (Note 15) (1 887 ) (2 530 ) (Loss)/Gain on sale of property, plant and equipment (1 ) 180 Write off of buildings - (66 ) Net foreign exchange gain 706 165

7.1 WRITE OFF OF BUILDINGS

No write off of buildings was recognised in the current year. In prior year a write off of $66 000 relating to the Inyanga Chalet which was destroyed by fire, was recognised.

8. JOINTLy CONTROLLED OPERATIONS

During 2012 RioZim Limited entered into two jointly controlled arrangements for the processing of sands rich in gold from the Cam & Motor Dump with Dalny and Ox Mining. In both arrangements RioZim, hauled the sands to the two processing plants whilst Ox and Dalny Mines processed the sands. Expenses incurred and income from the joint operation was shared equally.

Summarised financial statement information (50% share) of the jointly controlled operations are disclosed below:




2013 2012 US$000 US$000

Dalny Sales 2 779 Operating income / (expenses) 151 (1 333 ) Loss before tax 153 (554 ) Current liabilities - (277 )

Ox Mining Sales 157 1 151 Operating expenses (121 ) (919 ) Profit before tax 36 232 Current Assets - 116

9. OTHER INCOME Income from rental, clinic and clubs 176 180 Realised exchange gains 706 165 Unrealised exchange gains 599 - Scrap metal sales 27 107 Litigation settlement 267 - Creditors settlement discounts 581 - Other 5 66 2 361 518

The litigation settlement income of $267 000 relates to a court claim that was awarded to the Group against a transporter for the loss of metals in transit in 2004.

10. FINANCE REVENUE Interest income from short term investments 127 27 Total finance revenue 127 27

11. FINANCE COST Interest on interest bearing borrowing (9 734 ) (11 870 ) Unwinding of discount on rehabilation provision (1 ) - Interest charged on accounts payables (141 ) - (9 876 ) (11 870 )

The average cost of debt for 2013 was 19% per annum (2012 : 21%).

8. JOINTLy CONTROLLED OPERATIONS (CONTINUED)




12. INVESTMENT IN ASSOCIATE

The Group has a 22.2% (2012: 22.2%) interest in Murowa Diamonds (Private) Limited, an unlisted diamonds mining company.

The Group’s interest in Murowa Diamonds (Private) Limited is accounted for using equity method in the consolidated financial

statements.

The following table illustrates the summarised financial information of the Group’s investment in Murowa Diamonds (Private)

Limited:

Associate’s statement of financial position:

2013 2012

US$000 US$000

Current assets 24 600 20 600

Non-current assets 43 342 44 949

Current liabilities (13 175 ) (17 362 )

Non-current liabilities (33 468 ) (30 598)

Equity 21 299 17 589

Share of net assets 4 728 3 905

Reconciliation of carrying amount of investments to share of net assets:

Share of net assets 4 728 3 905

Impact of deemed cost on currency conversion 1 114 1 114

Carrying amount of the investment 5 842 5 019

Summarised statement of profit or loss of the Associate

Revenue 67 293 54 204

Cost of sales (37 383 ) (37 372 )

Administrative expenses (21 782 ) (15 974 )

Finance cost (3 257 ) (2 298 )

Profit before tax 4 871 (1 440 )

Income tax (expense)/credit (1 165 ) 238

Profit/(loss) for the year (continuing operations) 3 706 (1 202 )

Group’s share of profit for the year 823 (267 )

Carrying amount of the investment

At 1 January 5 019 5 286

Share of the associate’s profit/(loss) 823 (267 )

At 31 December 5 842 5 019


12. INVESTMENT IN ASSOCIATE (CONTINUED)

Investments in associates is equity accounted for in the group financial statements and accounted for at cost at company level at

a value of US$ 8 041 000. This treatment is consistent with prior year. The difference of US$1 114 000 arose on the remeasurement

of the fair value of the investment at company level during the 2009 currency conversion.

The Group has performed an impairment assessment on the associate . The five year forecasts show a profit trend. As a result the

Group has decided not to impair the associate at company level as the value in use will be higher than the carrying amount.

13. INCOME TAX CREDIT

The major components of income tax exposure for the years ended 31 December 2013 and 2012 are:

2013 2012

Consolidated statement of profit and loss US$000 US$000

Current income tax:

Current income tax charge - 216

Current capital gains tax charge - 65

Deferred tax:

Relating to origination and reversal of temporary differences (2 157 ) (2 229 )

Income tax credit reported in the statement of profit or loss (2 157 ) (1 948 )

Consolidated statement of Other Comprehensive Income (OCI)

Deferred tax related to items recognised in OCI during the year:

Fair value gains on available - for - sale investments 3 6

Income tax charged to OCI 3 6

A reconciliation between tax expense and the accounting profit multiplied by RioZim’ s

domestic tax rate for the years ended 31 December 2013 and 2012 is as follows:

Loss before tax (6 822 ) (7 471 )

At RioZim’ s statutory income tax rate of 25% (2012: 25%) (1 706 ) (1 868 )

Tax effects of:

- Associate results reported net of tax (206 ) (67 )

-Non-deductible expenses 481 367

- Capital gains tax - 65

-Utilisation of previously unrecognised tax losses (767 ) (2 708 )

-Unrecognised tax losses - 2 250

-Other 41 13

Tax credit (2 157) (1 948 )






13. INCOME TAX CREDIT (CONTINUED)

Deferred income tax Deferred income tax at 31 December relates to the following

Consolidated statement of Consolidated statement of financial position comprehensive income 2013 2012 2013 2012 US$000 US$000 US$000 US$000

Income tax related Deferred income tax liabilities Accelerated depreciation for tax purposes 16 18 (2 ) 289 Exploration and evaluation assets (3 560 ) (3 233 ) (327 ) (203) Mine properties (8 356 ) (8 412 ) 56 560 Other (150 ) (74 ) (76 ) (74) Available for sale investments (9 ) (6 ) - - Losses available for offset against future taxable income 16 340 13 525 2 815 1 282 Provisions 96 405 (309) 375 4 377 2 223 Deferred tax income 2 157 2 229

Deferred income tax assets (net) relating to income tax 4 377 2 223

Reflected in the consolidated statement of financial position as follows: Deferred tax assets 5 804 5 101 Deferred tax liabilities (1 427 ) (2 878 ) Deferred tax asset net 4 377 2 223

Reconcilliation of deferred asset, net:

2013 2012

US$000 US$000

Opening balance 1 January 2 223 -

Tax income during the period recognised in profit or loss 2 157 2 229

Tax charge during the period recognised in OCI (3 ) (6 )

Closing balance as at 31 December 4 377 2 223

Deferred tax assets are recognised for the carry forward of unused tax losses to the extent that it is probable taxable profits will be

available against which the unused tax losses can be utilised.

The Company has a deferred tax asset amounting to US$ 5 783 000 and a deferred tax liabilty of US$1 407 000.

The Group has recognised a deferred tax asset amounting to US$5 804 000 (2012: US$5 101 000) arising mostly from tax losses. Based on new business plans and strategies established the group is undergoing a restructuring exercise that would result in the utilisation of the assessed tax losses. Through a tax planning initiative the Group has established new subsidiaries and will transfer assets to the subsidiaries resulting in recoupment that will be used to set off against the assessed tax losses. The restructuring exercise is in its finalisation stages.




14. LOSS PER SHARE Basic loss per share amounts are calculated by dividing the net loss for the year by the weighted average number of ordinary

shares outstanding during the year excluding treasury shares.

Diluted earnings per share amounts are calculated by dividing the net loss attributable to the ordinary equity holders of the company after adjusting for impact of dilutive instruments.

Headline earnings per share amounts are calculated by dividing the net loss attributable to ordinary equity holders of the parent adjusted for profits, losses and items of capital nature that do not form part of the ordinary activities of the Group. The following reflects the income and share data used in the earnings per share computations:

2013 2012 US$000 US$000

Loss attributable to equity holders of the parent for basic earnings (4 561) (5 512) Adjustment for headline earnings Loss / (Gain) on disposal of property, plant and equipment 1 (180) Write off of land and buildings - 66 Headline earnings (4 560) (5 626) 000’s 000’s

Weighted average number of ordinary shares 53 363 45 536 Adjusted for effect of treasury shares - - Weighted average number of ordinary shares for basic earnings per share 53 363 45 536 Loss per share (cents) Basic (8.55) (12.10) Diluted (8.55) (12.10) Headline (8.55) (12.36) Diluted Headline (8.55) (12.36)

The Group has some convertible debentures that could potentially dilute the basic earnings per share in the future, but were not included in the calculation of diluted earnings per share because they are anti dilutive for the period(s) presented.

There has been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of authorisation of these financial statements.




15. PROPERTy, PLANT AND EQUIPMENT

Land and Plant Capital Motor Furniture buildings and work in vehicles and Total Group equipment progress fittings US$000 US$000 US$000 US$000 US$000 US$000

Cost

At 1 January 2012 28 232 14 471 - 1 827 314 44 844

Additions - 447 - - 32 479

Disposals (3 055 ) - - (73 ) (10 ) (3 138 )

Write offs (103 ) - - - - (103)

At 31 December 2012 25 074 14 918 - 1 754 336 42 082

Additions - 279 1 558 320 105 2 262

Disposals - - - (74 ) (9 ) (84 )

At 31 December 2013 25 074 15 197 1 558 2 000 432 44 260

Accumulated Depreciation

At 1 January 2012 1 708 3 714 - 1 357 253 7 032

Depreciation charge for the year 802 1 311 - 380 37 2 530

Disposals (1 931 ) - - (71) (7) (2 009 )

Write offs (37 ) - - - - (37)

At 31 December 2012 542 5 025 - 1 666 283 7 516

Depreciation charge for the year 492 1 258 - 103 34 1 887

Disposals - - - (74 ) (9 ) (83 )

At 31 December 2013 1 034 6 283 - 1 695 308 9 320

Net book value

At 31 December 2012 24 532 9 893 - 88 53 34 566

At 31 December 2013 24 040 8 914 1 558 305 124 34 940




15. PROPERTy, PLANT AND EQUIPMENT (CONTINUED)

Land and Plant Capital Motor Furniture buildings and work in vehicles and Total equipment progress fittings Company US$000 US$000 US$000 US$000 US$000 US$000

Cost At 1 January 2012 26 611 14 471 - 1 827 314 43 223 Additions - 447 - - 15 462 Disposals - - - (73 ) (10 ) (83 ) Write offs (103 ) - - - - (103 ) At 31 December 2012 26 508 14 918 - 1 754 319 43 499 Additions - 279 1 558 320 105 2 262 Disposals - - - (75 ) (9 ) (84 ) At 31 December 2013 26 508 15 197 1 558 1 999 415 45 677

Accumulated Depreciation At 1 January 2012 1 461 3 698 - 1 357 253 6 769 Depreciation charge for the year 720 1 311 - 380 33 2 444 Disposals - - - (71) (6) (77 ) Write offs (37) - - - - (37 ) At 31 December 2012 2 144 5 009 - 1 666 280 9 099 Depreciation charge for the year 482 1 258 - 103 30 1 873 Disposals - - - (74 ) (9 ) (83 ) At 31 December 2013 2 626 6 267 - 1 695 301 10 889

Net book value At 31 December 2012 24 364 9 909 - 88 39 34 400 At 31 December 2013 23 882 8 930 1 558 304 114 34 788

Group depreciation expense of US$1 740 000 (2012: US$2 171 000) has been charged in ‘cost of goods sold’ and US$147 000 (2012: US$359 000) in ‘administrative expenses’.

Write off of buildings

No write off was recognised in the current year. In the prior year, the write off amounting to a net book value of $66 000 relating to Inyanga Chalet which was destroyed by fire-was recognised in the Consolidated Statement of Comprehensive Income as a separate line item.




16. EXPLORATION, EVALUATION AND DEVELOPMENT ASSETS Group Exploration and Development Total exploration, evaluation costs evaluation and assets development assets US$000 US$000 US$000 Cost At 1 January 2013 6 411 7 129 13 540 Additions - 1 028 1 028 At 31 December 2013 6 411 8 157 14 568 Amortisation At 1 January 2013 - - - Amortisation for the year - 330 330 At 31 December 2013 - 330 330 Carrying amount At 31 December 2012 6 411 7 129 13 540 At 31 December 2013 6 411 7 827 14 238

Company Exploration and Development Total exploration, evaluation costs evaluation and assets development assets US$000 US$000 US$000 Cost At 1 January 2013 6 411 6 402 12 813 Additions - 1 028 1 028 At 31 December 2013 6 411 7 430 13 841 Amortisation At 1 January 2013 - - - Amortisation for the year - 330 330 At 31 December 2013 - 330 330 Carrying amount At 31 December 2012 6 411 6 402 12 813 At 31 December 2013 6 411 7 100 13 511


17. INVESTMENTS

17.1 AVAILABLE FOR SALE INVESTMENTS Group Company 2013 2012 2013 2012 US$000 US$000 US$000 US$000

At 1 January 147 18 147 18 Fair value adjustment 15 129 15 129 Additions 31 - 31 - At 31 December 193 147 193 147

The available for sale investments comprise of the Group’s non controlling interests of 1.5% in a medical investment company and investment in a boat syndicate.

The investment in medical company, which is non listed, is valued based on non market observable information and changes in the underlying assumption can lead to adjustment in the fair value of the investment.

17.2 INVESTMENT IN SUBSIDIARIES Group Company 2013 2012 2013 2012 US$000 US$000 US$000 US$000

Shares at costs less amounts written of (all 100% held unless indicated otherwise) Sengwa Colliery (Private) Limited (50%) - - 81 81 RioBasemetals Limited - - 55 55 RioChrome Limited - - 12 12 RioGold (Private) Limited - - - - RioZim Management Services (Private) Limited - - 2 2 Rio Tinto Properties Limited - - 15 15 RioZim Development Limited - - - - RM Enterprises (Private) Limited - - - - RioDiamonds (Private) Limited - - - - Rutala Mine (Private) Limited - - - - Sengwa Power Station (Private) Limited - - - - RioEnergy (Private) Limited - - 1 1 - - 166 166

18. INVENTORIES Stores and consumables 3 771 4 544 3 771 4 544 Metals and minerals in conentrates and circuit 45 165 38 466 45 165 38 466 Finished metals 3 992 - 3 992 - 52 928 43 010 52 928 43 010

During 2013, US$59 081 000 (2012: US$21 040 000) was recognised as an expense for inventories. This is recognised in cost of sales.

Inventory amounting to US$5 million (2012: US$5 million) has been pledged as security for borrowings . Included for the borow-

ing security is a cession of comprehensive insurance covering all risks over the pledged stocks (refer to note 23).




19.1 TRADE AND OTHER RECEIVABLES Group Company 2013 2012 2013 2012 US$000 US$000 US$000 US$000

Trade receivables 2 526 14 917 2 526 14 917 Other receivables and prepayments 1 384 1 186 2 370 1 872 3 910 16 103 4 896 16 789 Trade receivables are non-interest bearing and are generally on terms of 30 days to 120 days. These terms are normal for the mining sector and hence the trade receivables carrying amount is considered equal to fair value Neither past due <30 30-60 61-90 91-120 Total or impaired days days days days >120 days US$000 US$000 US$000 US$000 US$000 US$000 2013 3 910 3 220 - - - - 690 2012 16 103 15 413 - - - - 690

In determining the recoverability of a trade receivable, the Group performs a risk analysis considering the type and age of the outstanding receivable and the credit worthiness of the counterparty. Outstanding customer receivables are regularly monitored.

The amount of US$690 143 relates to the receivable from Reserve Bank of Zimbabwe (RBZ) . The amount owing was converted into a tradable 12 month bond that is repayable on 02 August 2014. The RBZ has confirmed the amount owing in US Dollars and directors are therefore of the view that the debt will eventually be recovered. The bonds have been carried at cost.

There were no doubtful debts at the reporting date, because all receivable are recoverable. The maximum exposure to credit risk at the reporting date is the carrying value of each class of all receivable mentioned above. The Group does not hold any collateral as security. An unregistered cession of US$5 million (2012: US$5 million) has been pledged as security for borrowings, refer to note 23. See note 28.1 (b) on credit risk of trade receivable, which explains how the Group manages and measures credit quality of trade

receivables that are neither past due nor impaired.

19.2 DERIVATIVE FINANCIAL ASSETS

The Group has quotational period derivative financial assets. The Group has entered into provisional pricing sales arrangement with some of its metals in concentrates customers. Final settlement value is based on final dry weight, agreed assays and final prices which are determined at the end of the quotational period which is usually 60 days after date of shipment. The quotational period is the period after the physical shipment of goods during which the price and grade of minerals sold is subject to change due to fluctuations in commodity prices and also upon testing by the counterparty of the mineral content. The fair value of the Quotational period (QP) derivatives as at 31 December 2013 is US$1 375 000 (2012:nil). The change in the fair value of these QP derivatives of US$1 375 000 gain (2012:nil) has been recognised in the profit or loss during the year as part of revenue.




21. ISSUED CAPITAL AND RESERVES Group Company 2013 2012 2013 2012 US$000 US$000 US$000 US$000

21.1 SHARE CAPITAL Authorised shares 100 000 000 ordinary shares of US$0.01 each 1 000 1 000 1 000 1 000 1 (one) Special Dividend Share of a nominal value of US$124 875.82 125 125 125 125 1 125 1 125 1 125 1 125

Group Shares issued and fully paid Number Share Share Issued of shares Capital Premium capital 000’s US$000 US$000 US$000

At 1 January 2012 29 986 425 500 925 Rights issue 10 000 100 4 900 5 000 Private placement allotment 13 250 133 6 493 6 626 Shares purchased for cash under employee share purchase scheme 127 1 150 151 Decrease in share premium due to transaction costs for issued share capital - - (443 ) (443 ) At 31 December 2012 53 363 659 11 600 12 259 At 31 December 2013 53 363 659 11 600 12 259

19.2 DERIVATIVE FINANCIAL ASSETS (CONTINUED)

Group Company 2013 2012 2013 2012 US$000 US$000 US$000 US$000 Quotational period derivatives 1 375 - 1 375 - 1 375 - 1 375 -

Group Company 2013 2012 2013 2012 US$000 US$000 US$000 US$000

20. CASH AND CASH EQUIVALENTS Cash at bank and on hand 669 1 034 669 1 034 Cash and cash equivalents 669 1 034 669 1 034






21. ISSUED CAPITAL AND RESERVES (CONTINUED) 21.1 SHARE CAPITAL (CONTINUED) Number Share Share Issued Capital Premium capital 000’s US$000 US$000 US$000 Company Shares issued and fully paid At 1 January 2012 29 986 425 500 925 Rights issue 10 000 100 4 900 5 000 Private placement allotment 13 250 133 6 493 6 626 Shares purchased for cash under employee share purchase scheme 127 1 150 151 Decrease in share premium due to transaction costs for issued share capital - - (443) (443) At 31 December 2012 53 363 659 11 600 12 259 At 31 December 2013 53 363 659 11 600 12 259

Following the restructuring of the Group in 2004, RioZim Limited’s 12 487 582 ordinary shares were converted into one special dividend share. The holder of the special dividend share has a right to future cash dividends from RioZim in respect of a period of ten years ending 31 December 2013. The special dividend will be calculated annually subject to and immediately fol lowing the approval by the RioZim Limited board of the Company’s final ordinary dividend in respect of the immediately preceding year, and will be due and payable to the shareholder on the date on which RioZim Limited pays a final dividend to its ordinary shareholders. The special dividends rank equally with dividends on ordinary shares. The special dividend shareholder is not entitled to board representation nor to voting rights at shareholders meetings.

Following a resolution of shareholders at the Annual General Meeting held on 17 August 2012, up to 10% of the unissued share capital is under the control of the directors who may issue the shares upon such terms and conditions as they think fit up to the date of the next annual general meeting.

Share purchase scheme

The exercise price of the granted shares is equal to the market price of the shares listed on the date of exercise. Shares are conditional on the employee completing one year’s service (vesting period). The shares have a contractual option term of four years. The Group has no legal or constructive obligation to repurchase or settle the shares in cash. No expense is recognised by the Group in relation to this scheme as the shares are exercisable at market prices.

In 2012, 127 000 shares (2013:nil) were issued as part of the share purchase scheme. The balance of the unissued shares are under the control of the directors subject to the provision of the company’s Memorandum

and Articles of Association, Companies Act (Chapter 24:03) and the Zimbabwe Stock Exchange Listing Requirements.


21.2 RESERVES

21.2.1 AVAILABLE FOR SALE RESERVE At 1 January 123 - 123 - Fair value gain on available for sale investment 12 123 12 123 At 31 December 135 123 135 123

The available for sale reserves relates to remeasurements of the investment in a private medical company. The Group holds 136 000 shares of the medical company.




21.2.2 OTHER RESERVES The other reserves relates to the equity component of the issued convertible debentures. Convertible debentures of US$1.55

million which are convertible at any point up to June 2017, were issued to Imara. The liability component is reflected in the loans and borrowings, refer to note 23.


At 1 January 133 - 133 - Convertible debentures - 133 - 133 At 31 December 133 133 133 133

21.2.3 RETAINED EARNINGS Opening balance 1 January 10 897 15 869 14 339 19 386 Loss for the year (4 561 ) (5 512 ) (5 266 ) (5 587 ) Other comprehensive income 1 407 540 1 407 540 As at 31 December 7 743 10 897 10 480 14 339

22. MATERIAL PARTLy OWNED SUBSIDIARIES

Financial information of subsidiaries that have material non-controlling interests is provided below:

Proportion of equity interest held by non-controlling interest: Country of incorporation 2013 2012 Sengwa Colliery (Private) Limited Zimbabwe 50% 50%

Accumulated balances of material non-controlling interests: 2013 2012 US$000 US$000

Sengwa Colliery (Private) Limited (425 ) (321 )

Losses allocated to material non-controlling interests: Sengwa Colliery (Private) Limited (82 ) (11 )

The summarised financial information of Sengwa Colliery (Private) Limited is provided below:

Summarised statement of profit or loss Revenue - 280 Other income 344 - Administrative expenses (602 ) (303 ) Profit before tax (258 ) (23 ) Income tax credit 50 1 (Loss)/profit for the year (208 ) 22 Attributable to non-controlling interest (104 ) (11 )


22. MATERIAL PARTLy OWNED SUBSIDIARIES (CONTINUED) 2013 2012 US$000 US$000 Summarised statement of financial position as at 31 December

Non-current assets 649 652 Current liabilities (379 ) (434) Non-current liabilities (1 120 ) (860 ) Total equity (850 ) (642) Attributable to: Equity holders of the parent (425 ) (321 ) Non-controlling interests (425 ) (321 ) Summarised cashflow information for the year ended 31 December 2013 Operating (256 ) 26 Working capital changes 250 (26 ) Investing 6 - Net decrease in cash and cash equivalents - -



23. INTEREST-BEARING LOANS AND BORROWINGS Effective Group interest rate 2013 2012 % Maturity US$000 US$000

Current Bank loans (facility limit US$9.5million (2012: $18.4 million)) 21% On demand 6 808 12 555 Bankers acceptances (facility limit US$NIL (2012: $8.0 million)) - On maturity - 6 496 Term loans (facility limit US$44.6 million (2012: $32.6 million)) 15% On scheduled dates 20 455 23 926 Debentures (facility limit US$3.6 million (2012: $3.6 million) 15% November 2014 1 591 1 550 Convertible debentures 13% August 2014 1 443 - Long term loan (Centametal AG) 12.50% December 2019 552 - 30 849 44 527 Non-current Term loans 15% On scheduled dates 13 708 - Bank loans 21% On demand - 3 167 Convertible debentures 13% August 2014 - 1 417 Long term loan (Centametal AG) 12.50% December 2019 3 932 3 986 17 640 8 570 Effective Company interest rate 2013 2012 % Maturity US$000 US$000 Current Bank loans (facility limit US$9.5million (2012: $18.4 million)) 21% On demand 6 808 12 555 Bankers acceptances (facility limit US$NIL (2012: $8.0 million)) - On maturity - 6 496 Term loans (facility limit US$44.6 million (2012: $32.6 million)) 15% On scheduled dates 20 455 23 926 Debentures (facility limit US$3.6 million (2012: $3.6 million) 15% November 2014 1 591 1 550 Convertible debentures 13% August 2014 1 443 - Long term loan (Centametal AG) 12.50% December 2019 552 - 30 849 44 527

Non-current Term loans 15% On scheduled dates 13 708 - Bank loans 21% On demand - 3 167 Convertible debentures 13% August 2014 - 1 417 Long term loan (Centametal AG) 12.50% December 2019 3 932 3 986 17 640 8 570

The total facility limits for the borrowing are US$57.7 million (2012: US$62.6 million) and the Group has interest bearings of US$48.5 million (2012: US$53.1 million).




23. INTEREST-BEARING LOANS AND BORROWINGS (CONTINUED)

23.1 CONVERTIBLE DEBENTURES

2013 2012 US$000 US$000

Debenture value 1 550 1 550 Interest 26 - Equity component (133 ) (133 ) 1 443 1 417 Security for interest bearing loans and borrowings The interest bearing borrowings have the following security arrangements: -Pledge of gold stock amounting to US$5 million; -Unregistered cession of export debtors for US$5 million; -Undertaking to pass gold sales proceeds due to RioZim Limited through the counterpart banks; -Cession of comprehensive insurance covering all risks over the pledged stocks; - Promissory notes issued by RioZim Limited; -Assignment of RioZim Limited Sales Agency Agreement; -Assignment of insurances covering gold bullions while in storage and/or in transit to the buyer; -Negative pledge over the assets of RioZim Limited; - Guarantee from RioZim Management Services (Pvt) Limited; - 100% shareholding in each of the following subsidiaries/associates, to the Security Sharing Agreement (SPV) , in terms of

the Security Sharing Agreement. These subsidiaries are : -RioGold (Pvt) Limited. -RioBaseMetals Limited. -RioEnergy (Pvt) Limited. -RioChrome Limited. -RioDiamonds (Pvt) Limited.

The Group is currently putting together a shared security arrangement for all interest bearing loans and borrowings. Under this arrangement all interest bearing borrowings will have a first ranking charge over 100% of the shareholding of the following RioZim Limited subsidiaries:

-RioGold (Pvt) Limited. -RioBaseMetals Limited. -RioEnergy (Pvt) Limited. -RioChrome Limited. -RioDiamonds (Pvt) Limited. Term loans These loans are repayable in full on 30 September 2015 and will be secured as above.

Long term convertible debentures The 13% debentures are repayable in full on the date of maturity on 1 August 2014.

Centametall loan The loan is repayable in equal monthly instalments of US$100 000 commencing on 1 July 2014 ending December 2019. The loan

is interest free and is unsecured. The total loan is US$6 600 000 but has been recorded at fair value of US$4 484 000 (2012: US$3 985 000).

Total interest expense on interest-bearing loans and liabilities was US$9 860 000 (2012: US$11 870 000). Interest amounting to US$768 000 was outstanding as at 31 December 2013. Repayment terms for this interest were renegotatied.


24. MINE REHABILITATION PROVISIONS Group Company 2013 2012 2013 2012 US$000 US$000 US$000 US$000 Balance as at 1 January 119 119 119 119 Unwinding of discount 1 - 1 - Arising during the year 34 - 34 - Balance at 31 December 154 119 154 119 Rehabilitation provision The Group makes full provision for the future cost of rehabilitating mine sites and related production facilities on a discounted

basis from the time of developing the mines and installing and using those facilities. The rehabilitation provision represents the present value of rehabilitation costs relating to mine sites, which are expected to be incurred over the next 11.7 years. These provisions have been created based on the Group’s internal estimates.

Assumptions based on the current economic environment have been made, which directors believe are a reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to take into account any material changes of the as-sumptions. However, actual rehabilitation costs will ultimately depend opon future market prices for the necessary rehabilitation works required that will reflect market conditions at the relevant time. Furthermore, the timing of rehabilitation is likely to depend on when the mines cease to produce at economically viable rates. This, in turn, will depend upon future prices, which are inher-ently uncertain.

The provision was calculated as follows: 2013 2012

Current closure costs (US$000) 485 361 Inflation rate 5% 5% Life of mine (years) 12.6 11.7 Interest rate 15% 15% Future value closure costs (US$000) 899 639 Present value recognised in Statement of Financial Position (US$000) 154 119

25. TRADE AND OTHER PAyABLES Group Company 2013 2012 2013 2012 US$000 US$000 US$000 US$000

Trade payables 33 597 23 536 33 602 23 537 Accruals 1 988 2 783 1 601 2 355 Leave liabilities 2 240 2 157 2 240 2 157 Statutory liabilities 3 331 1 643 3 320 1 633 Other payables 3 705 2 822 3 689 2 806 44 861 32 941 44 452 32 488

25.1 INCOME TAX PAyABLES Capital gains tax 65 65 - - Normal tax 217 217 - - 282 282 - -




25. TRADE AND OTHER PAyABLES (CONTINUED)

Other payables are payables that include corporate services and consultancy that are not included in trade payables.

Terms and conditions of the above financial liabilities in the ordinary course of business: Trade payables are non-interest bearing and have an average term of 30-90 days. Other payables are non-interest bearing and have an average term of 30-90 days.

25.2 NON-CURRENT LIABILITIES Group Company 2013 2012 2013 2012 US$000 US$000 US$000 US$000 Long term payable - Mining Industry Pension Fund (MIPF) 4 611 4 611 4 611 4 611 4 611 4 611 4 611 4 611

The long term payable is repayable in December 2015 and incurs interest at the rate of 9% per annum compounded monthly.



26. PENSION AND POST-EMPLOyMENT BENEFIT PLANS Group Company 2013 2012 2013 2012 US$000 US$000 US$000 US$000

Statement of financial position for : Pension benefits 230 1 501 230 1,501 Liability in the statement of financial position 230 1 501 230 1 501 Other comprehensive income (1 407 ) (540 ) (1 407 ) (540 )

The amounts recognised in the profit or loss were as follows: Current service cost 42 55 42 55 Interest cost on benefit liability 150 878 150 215 Total, included in staff costs (note 7) 192 933 192 270

The actual return of plan assets for the year ended 31 December 2013: US$463 477 (2012 : US$755 395).

The amounts recognised in the statement of financial Group Company position are determined as follows: 2013 2012 2013 2012 US$000 US$000 US$000 US$000 Present value of funded obligations 6 674 7 933 6 674 7 933 Fair value of plan assets (6 444 ) (6 432 ) (6 444) (6 432) Liability in the statement of financial position 230 1 501 230 1 501

The movement in the defined benefit obligation for the year is as follows: At 1 January 7 933 8 447 7 933 8 447 Current service costs 42 55 42 55 Interest costs 793 878 793 878 Benefits paid (484 ) (710 ) (484 ) (710 ) Remeasurement (1 610 ) (737 ) (1 610 ) (737 ) Liability as at 31 December 6 674 7 933 6 674 7 933


26. PENSION AND OTHER POST-EMPLOyMENT BENEFIT PLANS (CONTINUED)

The movement in the fair value of plan assets for the year is as follows: Group Company 2013 2012 2013 2012 US$000 US$000 US$000 US$000

At 1 January 6 432 6 406 6 432 6 406 Interest income on plan assets 643 641 643 641 Benefits paid (484 ) (710 ) (484 ) (710 ) Contributions paid into the fund 56 86 56 86 Remeasurement (203 ) 9 (203 ) 9 Assets as at 31 December 6 444 6 432 6 444 6 432

The principal actuarial assumptions applied are as follows : 2013 2012

Discount rate 10% 10% Future salary increase 9% 9% Future pension increase 5.5% 5.5% Inflation 5.5% 5.5%



Assumption regarding future mortalities experience has been set as follows:

Post-retirement Mortality of members under the scheme will be in accordance with the (55) Ultimate table.

Pre-retirement Mortality rates used for pre retirement are consistent with the experience of the actuarial company.

Plan assets comprise the following: Group Company 2013 2012 2013 2012 US$000 US$000 US$000 US$000

Equity instruments 1 822 1 931 1 822 1 931 Property 4 239 4 160 4 239 4 160 Other 383 341 383 341 Total 6 444 6 432 6 444 6 432

Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. The largest proportion of assets is invested in equities, property and cash. The Group believes that equities offer the best returns over the long term with an acceptable level of risk. The majority of equities are in a diversified portfolio of blue chip entities.

Pension plan assets include the company’s ordinary shares of 377 896 which are valued at 31 December 2013 at US$208 599 (2012: US$124 706).



The expected return on plan assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the end of

the reporting period. Expected returns on equity and property investments reflect long-term real rates of return experienced in the respective markets.

RioZim has agreed that it will aim to eliminate the deficit over the next five years. Funding levels are monitored on an annual basis and the current agreed regular contribution rate is 12% of pensionable salaries in Zimbabwe. The next valuation is due to be completed at 31 December 2014. The Group considers that the contribution rates set at the last valuation date are sufficient to eliminate the deficit over the agreed period and that regular contributions, which are based on service costs, will not

increase significantly.

Amounts for the current and previous period are as follows:

2013 2012 2011 2010 2009 Defined benefit obligation (6 674 ) (7 933 ) (8 447 ) (8 672 ) (5 850 ) Plan assets 6 444 6 432 6 406 6 380 5 025 (Deficit ) /surplus (230 ) (1 501 ) (2 041 ) (2 292 ) (825 )



Below are estimated future contibutions per individual which are based on salary escalation of 9% per annum: 2014 2015 2016 Contributions 61 67 73

A quantitative sensitivity analysis for significant assumption as at 31 December 2013 is as shown below:

Assumptions D iscount rate Future salary Future pension

0.5% 0.5% 0.5% 0.5% 0.5% 0.5%

Sensitivity Level increase decrease increase decrease increase decrease $’000 $’000 $’000 $’000 $’000 $’000 Impact on the net defined obligation 286 (310 ) (12 ) 11 (282 ) 261

Assumptions Life expectancy of pensioners

increase decrease

Sensitivity Level by 1 year by 1 year $’000 $’000 Impact on the net defined obligation (212 ) 221 The average duration of the defined benefit plan obligation at the reporting period is 10.5 years. Pension benefits Pensions are provided for all employees through either the RioTinto (Africa) Pension Fund or the Mining Industry Pension Fund

(MIPF). Both the employer and employees contribute to the funds.



Pension benefits (continued) The RioTinto (Africa) Pension Fund is a defined benefit fund. It is self-administered and is actuarially valued every year. The last

valuation was done in January 2014 for the position as at 31 December 2013.

The Mining Industry Pension Fund is a defined contribution fund.

The Company and all employees also contribute to the National Social Security Authority (NSSA), social security scheme. The National Social Security Authority Scheme was promulgated under the NSSA Act 1989. The Group’s obligations under the scheme are limited to specific contributions as legislated from time to time and are presently 3.5% of pensionable emoluments

per month for each employee up to a maximum of US$25 per month per employee.



27. RELATED PARTy TRANSACTIONS Management Contributions Sales to services from owed by owed to to related related related related related parties parties parties parties parties US$000 US$000 US$000 US$000 US$000

Associate Murowa Diamonds (Pvt) Limited 2013 - 140 - 12 - 2012 - 31 - 115 - Shareholders GemRioZim Investments Limited 2013 - - 1 875 - 2 050 2012 - - - - 229 RioTinto (Africa) Pension Fund 2013 62 - - - 43 2012 87 - - - 179 Directors fees 2013 - - - - 62 2012 - - - - 108

Terms and conditions of transactions with related parties Labour service and materials are provided at 20%-35% mark-up on cost to Murowa Diamonds (Private) Limited which is an associate company of RioZim. Management fees are for advisory and consultation services which are rendered by GemRioZim

Investments Limited. The management fees are charged at 1% of the Group’s net turnover. The management fees are payable quarterly whilst the associate balances are payable within 30 to 60 days.

Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash.

Key management compensation Key management includes directors (executive and non-executive), members of the executive committee, the Company Secre-

tary and Head of Internal Audit.

The compensation paid or payable to key management for employee services is shown below:

2013 2012 US$000 US$000

Salaries and other short term employee benefits 1 602 2 665 Post employment benefits 136 359 Termination benefits 235 - 1 973 3 024

Amount Amount


28. FINANCIAL RISK MANAGEMENT

28.1 FINANCIAL MANAGEMENT AND POLICIES

The Group’s principal financial liabilities, other than derivatives, comprise of loans and borrowings and trade and other payables. The main purpose of these financial liabilities is to finance the Group’s operations. The Group’s principal financial assets include trade and other receivables, cash and short-term deposits that derive directly from its operations. The Group also holds available-for-sale investments and enters into derivative transactions.

The Group is exposed to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and commodity price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potentially adverse effects on the Group’s financial performance.

Risk management is carried out by management under policies approved by the Board of Directors. Management identifies, evaluates and manages financial risks in close co-operation with the Group’s operating units. The Board provides principles for overall risk management, as well as policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk, and investment of excess liquidity.

(a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprise three types of risk: interest rate risk, currency risk and commodity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, available-for-sale investments and derivative financial instruments.

(i) Foreign currency risk

The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the South African Rand. Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense is denominated in a different currency from the Group’s presentation currency).

Group policy is to adopt a non-speculative approach to manage risk while maximising profits. Exposure to exchange rate fluctuations is monitored by management. At 31 December 2013, if the United States Dollar had weakened/strengthened by 10% against the South African Rand with all other variables held constant, post-tax loss for the year would have been US$ 327 113 (2012: US$478 515) lower / US $399 805 (2012: US $391 512) higher, mainly as a result of foreign exchange losses/gains on translation of South African Rand denominated trade payables.

(ii) Cash flow and fair value interest rate risk

The Group has no significant interest bearing assets. The Group’s interest rate risk arises from current borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk.

The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions.

Based on the simulations performed, the impact on post-tax loss of a 1% shift would be a maximum decrease/increase of US$468 000 (2012: US$429 000), respectively. The simulation is done on an annual basis to verify that the maximum loss potential is within the limit given by the management.

(ii) Commodity price risk

The Group is exposed to commodity price risk in relation to its products of gold, nickel, copper and PGMs whose prices are determined by international market forces.




The table below summarises the impact of increase/decreases in the prices of the commodities on the Group’s post tax profit for the year. The analysis is based on the assumption that the commodities prices increase/decrease by 5% with all other variables held constant.

Impact on Impact on post tax post tax loss loss 2013 2012 US$000 US$000

Nickel 2 058 234 Copper 1 235 334 Cobalt 20 4 Gold 1 397 1 824 Platinum 177 70 Palladium 448 153 Silver 18 16 Rhodium 16 5

(b) Credit risk Credit risk is the risk that the counterparty will not meet its obligations under a financial instrument or customer contract,

leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

The Group’s cash equivalents and short term deposits are placed with high credit quality institutions. Approved short term investments and deposits are at variable interest rates and mature within one year. The Group has policies that limit the amount of credit exposure to any one financial institution.

Trade receivables

Customer credit risk is managed through the Group’s established policy, procedures and controls relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating and individual credit limits are defined in accordance with this assessment.

Outstanding customer receivables are regularly monitored and an impairment analysis is performed at each reporting date on an individual basis for all customers. The carrying amount of the financial assets included in the Consolidated Statement of Financial Position represent the Group’s exposure to credit risk in relation to those assets.

Management is of the view that there is a low risk of default due to the following reasons:

a) The Group’s major customers are reputable companies which are globally recognised and do not have any history of default. b) As at 31 December the majority of balances were current and a large portion was settled in January and February 2014.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market position. Due to the dynamic nature of the underlying businesses, management aims at maintaining flexibility in funding by keeping committed credit lines available.

The table below analyses the Group’s non-derivative financial assets and liabilities in relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The liabilities include both interest and principal cash flows. The amounts disclosed in the table below are the contractual undiscounted cash flows.






28.1 FINANCIAL MANAGEMENT AND POLICIES (CONTINUED)

2013 2012 <1 Between 1-3 <1 Between 1-3 year years year years US$000 US$000 US$000 US$000 Assets Cash and cash equivalents 669 - - - Trade and other Receivables 3 910 - 16 103 - Derivative financial assets 1 375 - - - Total 5 954 - 16 103 - Liabilities Trade and other payables 44 863 5 478 32 941 5 072 Borrowings 36 710 24 343 51 120 10 874 Total 81 573 29 822 84 061 15 946 Liquidity gap (75 619) (29 822 ) (67 958) (15 946)

The liquidity gap will be managed by the restructuring of short-term debt to long-term debt. This will match obligations on interest, capital repayments and creditors to the Group’s cash generation and in turn allow for a reduction in current liabilities.

28.2 CAPITAL RISK MANAGEMENT The Group’s objectives when managing capital are to safeguard the ability to continue as a going concern in order to provide

returns to shareholders and benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the Consolidated Statement of Financial Position) less cash and bank. Total capital is calculated as ‘equity’ as shown in the Consolidated Statement of Financial Position plus net debt.

During 2013, the Group’s strategy was to maintain a gearing ratio between 40% and 55%, however due to the high cost of borrowing this was not achieved. The gearing ratio at 31 December 2013 was as follows:


28.2 CAPITAL RISK MANAGEMENT (CONTINUED) 2013 2012 US$000 US$000

Total borrowings 48 489 53 097 Less cash and cash equivalent ( 669) (1 034) Net debt 47 820 52 063 Total equity 19 523 23 412 Total capital 67 343 75 475 Gearing ratio (%) 71 70

29. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Fair value of available for sale investments, trade receivables, derivative financial assets interest bearing borrowings and all other receivables and payables approximates their carrying amount.

29.1 FAIR VALUE HIERARCHy

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation tech-

nique:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value are observable either

directly or indirectly.

Level 3: techniques that use inputs that have significant effect on the recorded fair value that are not based on observable

market data.

Level 1 Level 2 Level 3

Recurring fair value measurements US$000 US$000 US$000

2013

Available for sale investments - - 162

Derivative financial assets - 1 375 -

2012

Available for sale investments - - 147

29.2 VALUATION TECHNIQUES

Derivative financial assets

The Group has quotational period derivative financial assets. The Group has entered into provisional pricing sales arrangements

with some of its metals in concentrate customers. Final settlement value is based on final dry weight, agreed assays and final

prices which are determined at the end of the quotational period which is usually 60 days after date of shipment. The quotational

period is the period after the physical shipment of goods during which the price and grade of mineral sold is subject to change

due to fluctuations in commodity prices.




29.2 VALUATION TECHNIQUES (CONTINUED)

Description of valuation techniques used and key inputs to valuation of the quotational period derivative assets.

Type of financial Fair value

instrument as at 31

December Valuation

2013 technique Significant inputs

$000 Quotational period derivatives 1 375 DCF method Estimated future Commodity price Quantities and final assays

Available for sale investments

The fair value of the available for sale investments has been determined using the Net Asset Value (NAV) of the investee.

Management has evaluated and believes that NAV provides the most reliable and reasonable fair value after taking into account

the information available, the nature and operations of the investee and the purpose of the Group’s investment in the investee.

The shares of the investee are not publicly traded and there are no other similar companies in the same market whose shares are

publicly traded. Furthermore, the investee does not have a history of declaring dividends. The Group does not have access to the

investee’s future plans and budgets given the size of its share holding in the investee. It is management’s view that the assets

and liabilities of the investee are not carried at values that are significantly different from their fair values. After considering the

above factors and the materiality of the investment, management believes the investment’s fair value is not materially different

from the Group’s share of the NAV of the investee and that NAV gives the best estimate of the investment’s fair value.

Below is the financial information of the investee that was used to calculate the fair value.

2013 2012 US$000 US$000 Total assets 14 115 13 554 Total liabilities (3 684) (4 111) Net Asset value 10 431 9 443 Fair value of investment (1.5% ) 162 147

30. BORROWING POWERS

The borrowing powers of the Company are governed by its Articles of Association which states that the company’s borrowings are limited at any given time to twice the value of the funds attributable to the shareholders. Directors may exceed the borrowing limit, as stipulated in the Company’s Articles, by an additional amount in the sum of US$10 million if the need arises.

The level of borrowings at 31 December 2013 was adequately covered in this respect. 31. COMMITMENTS

31.1 OPERATING LEASE COMMITMENTS Group as lessee The Group has entered into commercial lease for its head office space. This lease has a tenure of one year with a renewal

option. There are no restrictions placed upon the Group by entering into this lease.




31. COMMITMENTS (CONTINUED)

31.1 OPERATING LEASE COMMITMENTS (CONTINUED)

Future minimum rentals payable under non-cancellable operating leases as at 31 December are as follows: 2013 2012 US$000 US$000 Payable within one year 179 179 Group as Lessor

The Group has entered into commercial property leases on its property portfolio consisting of the Group’s surplus office, recre ational facilities and residential buildings. These leases have terms of one year. All leases include a clause to enable upward

revision of the rental charge on an annual basis according to prevailing market conditions.

Future minimum rentals receivable under non-cancellable operating leases as at 31 December are as follows:

2013 2012 US$000 US$000 Payable within one year 141 92

31.2 CAPITAL COMMITMENTS At the reporting date there were no capital commitments.

32. EVENTS AFTER THE REPORTING PERIOD At the date of approval of the financial statements there were no events after the reporting period that were material to require separate disclosure in these financial statements.

33. GOING CONCERN

The Group has incurred losses as a result of high interest rates and has recorded a net loss for the year ended 31 December 2013 of US$4.7 million (2012: US$5.5 million). As at that date its current liabilities exceeded its current assets by $17.1 million (2012: US$17.6million) as a result of short term borrowings of US$30.8 million (2012: US$44.5 million). These factors point to a material uncertainty on the Group’s ability to continue as a going concern and, therefore that it may be unable to realise its assets and discharge its liabilities in the normal course of business. Directors assess the ability of the Group to continue as a going concern at the end of each financial year and believe that the Group is a going concern for the reasons identified below:

The successful termination of the loss-making toll refining contract with Centametall in July 2012 is starting to bear some fruits as evidenced by the improvement in Empress Nickel Refinery (ENR) profitability. ENR recorded a profit margin of US$7.9 million in 2013 (2012:US$9.1 million). To guarantee stability of matte supplies for ENR, a long term matte supply contract was agreed and signed with the matte supplier. The new oxygen plant that was installed during the year is expected to result in costs savings of approximately US$300 000 per month.

The Group’s bank debt position marginally decreased from US$53.1 million in December 2012 to US$48.5 million in December 2013. The average cost of debt also continues to reduce from 21% to 19% in 2013 through rates negotiations and restructuring of the loan facilities. The successful refinancing of the debt is expected to further reduce interest costs by almost half and improve profitability.




33. GOING CONCERN (CONTINUED)

The Group is also in the process of re-opening Cam & Motor mine which was a world class mine before it closed in 1968 after producing 150 tonnes of gold. A plant is being designed and manufactured in China and the project is expected to be commissioned in second half of 2014.

Key creditors including financial institutions remain supportive through credit lines and shareholders remain strongly supportive of management’s efforts to improve productivity.

The Group’s restructuring plan is now in its concluding phases and will enable capital to be raised at subsidiary level and raise funds to retire debt.

The directors therefore believe that the Group will continue to operate as a going concern and the preparation of these financial statements on a going concern basis is still appropriate. This basis assumes that the realisation of assets and settlement of liabilities will occur in the ordinary course of business.




Riozim Top 20 Shareholders

As at 31 December 2013

Rank No. of Shares%

1 GEMRIOZIM INVESTMENTS LTD *(NNR) 13 325 000 24.97%

2 OLD MUTUAL LIFE ASSURANCE CO. ZIM LTD 11 805 030 22.12%

3 RIOZIM FOUNDATION CO (PVT) LTD 6 003 579 11.25%

4 TURNER ROY 4 991 960 9.35%

5 EDWARDS NOMINEES (PRIVATE) LIMITED 1 663 648 3.12%

6 FED NOMINEES (PRIVATE) LIMITED 1 451 555 2.72%

7 CHARTERHOUSE 3 LTD- (NNR) 588 027 1.10%

8 NATIONAL RAILWAYS OF ZIMBABWE 562 737 1.05%

9 BARCLAYS ZIMBABWE NOMINEES (PRIVATE) LIMITED 476 450 0.89%

10 T F S NOMINEES (PRIVATE) LIMITED 455 908 0.85%

11 SYMONDS-NNR LLOYD GEOFFREY 392 385 0.74%

12 ZWM NOMINEES (PVT) LTD 390 270 0.73%

13 NILESHKUMAR & SANJAYKUMAR PATEL 379 472 0.71%

14 RIO TINTO (AFRICA) PENSION FUND 377 896 0.71%

15 LOCAL AUTHORITIES PENSION FUND 333 000 0.62%

16 CATERING INDUSTRY PENSION FUND 312 336 0.59%

17 NATIONAL RAILWAYS OF ZIMBABWE CONTRIBUTORY PENSION FUND 308 056 0.58%

18 DATVEST NOMINEES ( PVT ) LTD 301 746 0.57%

19 GURAMATUNHU FAMILY TRUST 288 769 0.54%

20 AFRICA INVESTMENT TRADING LIMITED *(NNR) 268 494 0.50% SHARES SELECTED 44 676 318 83.72% SHARES NOT SELECTED 8 686 485 16.28% SHARES ISSUED 53 362 803 100% HOLDERS 1 885

Key* NNR - New Non Resident


Notice of Annual General Meeting

Notice is hereby given that the 58th Annual General Meeting of members will be held at No.1 Kenilworth Road, Highlands, Harare, Zimbabwe on Wednesday, 28 May 2014 at 10.30 a.m, for the following purposes:-

1. ORDINARy BUSINESS

1.1 To take note of the Notice convening the Meeting and to confirm the Quorum thereof.

1.2 To confirm the Minutes of the Annual General Meeting held on 30 May 2013 and to deal with matters arising therefrom.

1.3 To receive and consider the accounts and reports of the directors and of the auditors for the year ended 31 December 2013.

1.4 a) To note that Dr S H S Makoni and Messrs T P B Mpofu and R M Tait have resigned. Although eligible, they have opted not to stand for re-election.

b) To elect directors in place of those retiring. Messrs E N Mushayakarara, S R Beebeejaun and M P Mahlangu retire by rotation and being eligible seek re-election in accordance with Article 95 and 96 of the Company’s

Articles of Association.

c) Messrs L P Chihota and M T Sachak who were appointed as directors on 4 December 2013 offer themselves for re-election in accordance with Article 101 of the Company’s Articles of Association.

1.5 To determine the remuneration of the directors.

1.6 To determine the remuneration for the past audit and to appoint auditors for the ensuing year. Ernst & Young retire and being eligible offer themselves for re-election.

2. SPECIAL BUSINESS 2.1 To consider and if deemed fit pass with or without modification the following Special Resolution:- Amendment of the Memorandum and Articles of Association. That subject to the written approval of the Registrar of Companies, in terms of Section 20 of the Companies Act

[Chapter 24:03], the Company’s Memorandum and Articles of Association shall be amended as follows:-

a) Article 103: Appointment of Directors Be renumbered as Article 103a and the following be inserted as Article 103b:- “No person shall be appointed as director with a duration of appointment for life.”

b) Article 105: Quorum Be deleted in its entirety and substituted with the following: “The quorum necessary for the transaction of the business of the directors may be fixed by the directors and,

unless so fixed, shall be one half of the directors and if that number ends in a fraction then the next whole number above the fraction: PROVIDED THAT if within half an hour from the time appointed for the meeting of directors a quorum is not present, the meeting shall stand adjourned to the same day in the next week, at the same time and place, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the director or directors present shall be a quorum.”


Notice of Annual General Meeting

c) Article 112: Signed Resolution Is amended by the deletion of the first paragraph and the substitution of the following paragraph as the first

paragraph. “A resolution in writing signed by directors (or their alternates, if applicable) who are present, at the time when

the resolution in question is signed by the first of such directors, in Zimbabwe, whose number is a majority of the directors for the time being in office and not less than four directors, inserted in the minute book, shall be as valid and effective as if it had been passed at a meeting of the directors duly convened and held”.

2.2 To obtain by ordinary resolution the requisite authority to exceed the Company’s borrowing limit by an additional amount of US$10 million until the next Annual General meeting.

In terms of Article 85 of the Company’s Articles of Association, the Company’s borrowing powers should be limited at any given time to twice the value of the funds that are attributable to the shareholders and any excess should be sanctioned by the company in general meeting.

3. ANy OTHER BUSINESS

3.1 To transact any other business as may be transacted at an Annual General Meeting.

Note: (i) A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and

vote on his behalf. A proxy need not be a member of the company. (ii) The instrument appointing a proxy must be deposited at the registered office of the Company or at the office

of the Company Transfer Secretaries (Corpserve Transfer Secretaries (Private) Limited , Second Floor , ZB Centre, Corner First Street and Kwame Nkrumah) not less than forty-eight hours before the time appointed for the holding of the meeting.

By order of the BoardRioZim Management Services (Private) Limited (Secretaries)Per S Omarshah6 May 2014

SHAREHOLDERS’ DIARY Financial year end 31 December 2013 Publication of 2013 Financial Results 27 March 2014 Annual General Meeting 28 May 2014 Half year end 30 June 2014 Publication of Interim Results August 2014


Notes


Notes


For use at the Annual General Meeting (“AGM”) of RioZim Limited to be held at the Company Board Room, 1 Kenilworth Gardens, Highlands, Harare at 1030hrs on Wednesday 28 May 2014.

I/We _______________________________________________________________________________________________(Name/s in block letters)

Of _________________________________________________________________________________________________

Being a member of RioZim Limited (“the Company”)

And entitled to ___________________________________________________________________________________ votes

Hereby appoint ________________________________________________of_____________________________________

___________________________________________________________________________________________________

Or failing him/her ______________________________________________of _____________________________________

___________________________________________________________________________________________________

As my/our proxy to vote for me/us on my/our behalf at the general meeting of the Company as specified and any adjournment there of.

In terms of section 129 of the Companies Act (Chapter 24:03) a member of the Company is entitled to appoint one or more

proxies to act in the alternative, to attend and vote and speak instead of him. A proxy need not be a member of the Company.

In acccordance with Article 73 of the Company’s Articles of Association, instruments of proxy must be deposited at the

registered office of the Company or at the office of the Company Transfer Secretaries (specified overleaf ) not less than forty-

eight hours before the time appointed for holding the meeting.

Number of shares_______________________________________________________________________________________

Signed this_________________________ Day of ________________________________________________________2014

Signature of member __________________________________________________________________________________

Detachable formof proxy

Address

Address


INSTRUCTIONS FOR SIGNING AND LODGING THIS FORM OF PROXy

1. A deletion of any printed matter and the completion of any blank spaces need not be signed or initialled. Any alteration or correction must be initialled by the signatory/ies.

2. The Chairman shall be entitled to decline to accept the authority of a person signing the proxy form:

(a) under a power of attorney (b) on behalf of a company

unless that person’s power of attorney or authority is deposited at the offices of the Company’s transfer secretaries not less than 48 hours before the meeting.

3. If two or more proxies attend the meeting then that person attending the meeting whose name appears first on the proxy form and whose name is not deleted, shall be regarded as the validly appointed proxy.

4. When there are joint holders of shares, any one holder may sign the form of proxy. In the case of joint holders, the senior who tenders a vote will be accepted to the exclusion of other joint holders. Seniority will be determined by

the order in which names stand in the register of members.

5. The completion and lodging of this form of proxy will not preclude the member who grants this proxy form from attending the meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof should such member wish to do so.

6. In order to be effective, completed proxy forms must reach the registered office of the Company or the Company’s transfer secretaries (specified below) not less than 48 hours before the time appointed for the holding of the meeting.

7. Whether or not you intend to be present at the AGM, please complete and return the Form of Proxy. The completion of the Form of Proxy will not prevent you from attending and voting at the meeting or any adjournment thereof, in person if you wish to do so.

Transfer Secretaries CorpServe Registrars (Private) Limited

2nd Floor ZB Centre

Cnr 1st and Kwame Nkrumah Avenue

Harare

+263-4-758193, 750711/2

Notes to the proxy

RIOZIM LIMITED: 1 Kenilworth Road, Highlands, Harare.P O Box CY 1243, Causeway, or

P O Box HG 900 Highlands, Harare, ZimbabweTelephone: +263 (04) 746141/9, 776085/91, 746089/95.Fax: +263 (04) 746228

This report can be viewed online at www.riozim.co.zw

Documents

PAGE PAGE · 2017-09-06 · PAGE PAGE 1 RIOZIM LIMITED ANNUAL REPORT 2013 Performance Highlights 03 Operations’ Location 04 Company Overview 05 Directorate and Management 07 Board