Marange Resources posts $30m loss

via Marange Resources posts $30m loss – The Zimbabwean 9 July 2015

Marange Resources incurred a loss amounting to more than $30 million in 2014, according to a report on state enterprises and parastatals by the Auditor General (AG).

Marange Resources is one of the seven companies that were given licences to operate diamond mining in the Chiadzwa diamond fields before government announced that the firms must merge. It is 100 percent owned by the Zimbabwe Mining Development Corporation (ZMDC), a government outfit.

The company was incorporated as Blackwood Mining (Pvt) Ltd in November 2005 before changing its name to Marange Resources in 2007. It conducted mining activities in the Chiadzwa area using special mining grants issued to ZMDC by the mines ministry.

According to the AG, Mildred Chiri, the company’s total liabilities exceeded total assets by almost $55 million. “These conditions (loss making) along with other matters… indicate the existence of a material uncertainty that may cast doubt about the company’s ability to continue as a going concern,” said Chiri in the report.

The mines minister, Walter Chidhakwa, has already appointed a team to carry out an investigation into the affairs of the company and the senior management of the firm is on forced leave as results of the probe are awaited.

The audit established that Marange Resources was operating without a substantive board, as is required. The previous board was dismissed in December 2013 after Chidhakwa’s appointment and in the wake of the general elections that Zanu (PF) won and formed a government to replace the Government of National Unity (GNU) that ran from February 2009.

The mines permanent secretary was representing the board in the absence of a substantive team. As a result, noted the report, there was “ineffective oversight of company operations, financial reporting and internal control over financial reporting”. There were long outstanding reconciling items on creditors’ issues dating back to 2011 amounting to about $500,000.

In addition, Marange Resources was not paying its creditors on time and was charged $1,637 million as interest on overdue accounts by the suppliers that included Health Harvest, Amtec Motors, ZESA, Fawcett Security and Bell PTA. Marange paid management repairs and maintenance allowances for use of private vehicles for work purposes.