ZIMBABWE CONSOLIDATED DIAMOND COMPANY€¦ · Belgravia Harare 1.1. COMPANY BACKGROUND Zimbabwe...

:: ZIMBABWE CONSOLIDATED DIAMOND COMPANY (ZCDC)

:: ZCDC Annual Report 2017

1



2

ResponsibleAccountableTransparent

I amI amI am

DiamondI am



3

PAGE1. ZCDC COMPANY PROFILE 51.1. Company Background 51.2. Vision, Mission and Corporate Values 6

2. DIRECTORS & EXECUTIVE MANAGEMENT PROFILES 82.1. Non-Executive Directors 2017 82.2. Executive Management 10

3. HIGHLIGHTS 18

4. CHAIRMAN’S STATEMENT 19

5. CHIEF EXECUTIVE OFFICER’S STATEMENT 21

6. CORPORATE GOVERNANCE STATEMENT 276.1. Board Mandate 286.2. Board Composition 2017 286.3. Board Committees and Composition 2017 28

Contentstable of



4

COMPANY PROFILE:: ZIMBABWE CONSOLIDATED DIAMOND COMPANY (ZCDC)



5

1. ZCDC COMPANY PROFILE

Registration Number: 4943/2015

Registeredoffice

Address: No. 35-37 Cosham Road Borrowdale Harare Telephone Number +263 (04) 852 401-4

Bankers: FBC Bank Private Banking Belgravia Harare

1.1. COMPANY BACKGROUND

Zimbabwe Consolidated Diamond Company (Pvt) Ltd (ZCDC) was formed following the March 2015 Government decision to consolidate diamond mining in Marange under a wholly owned Government Company.

Government’s objective was to ensure that there would be transparency, accountability and optimal commercial exploitation andmarketingofZimbabwe’sdiamondsthatwouldbenefitordinaryZimbabweans.

ZCDC is a wholly owned by the Government of Zimbabwe through the Zimbabwe Mining Development Corporation (ZMDC) which has 100% shareholding of the company.

ZCDC was formed with the following mandate;• To enhance adequate investment in diamond mining beyond alluvial.• To explore for kimberlitic resources and build bankable mining reserves.• Toenhancecontributiontothefiscusandcommunitydevelopment.• ToenableGovernmenttomanagemoreefficientlyoperationsandexploitationofthecountry’sdiamondresources.• To achieve better accountability and transparency.



6

1.2. VISION, MISSION AND CORPORATE VALUES

The guiding tenets for the business as espoused through the vision, mission and values are depicted in the diagram below.

SUPP

LY C

HA

IN M

AN

AG

EMEN

T

HU

MA

N C

API

TAL

MA

NAG

EMEN

TA

ND

CO

NSU

LTAN

CY D

EVEL

OPM

ENT

OPE

RATI

ON

AL

EXCE

LLEN

CE E

XPLO

RATI

ON

MIN

ING

AN

D P

ROCE

SSIN

G

PRO

TEC

TIN

G A

ND

SU

RVEI

LLA

NCE

SE

RVIC

ES

FIN

AN

CE A

ND

ASS

ET M

AN

AG

EMEN

T

SAFE

TY H

EALT

H E

NVI

RON

MEN

TQ

UA

LITY

VISION

RESEARCH AND DEVELOPMENTLEVERAGING ON TECHNOLOGY

STRATEGIC ALLIANCE AND STAKEHOLDER MANAGEMENT

COMPLIANCE, LEGAL AND CORPORATE AFFAIRS

PRODUCTION AND BRAND MARKETING

RISK MANAGEMENT

VALUES: Zero Harm, integrity, Transparency, Team work, Result oriented, Innovation, Commitment

VISION, MISSION AND CORPORATE VALUES



7

DIRECTORS & EXECUTIVE MANAGEMENT PROFILES



8

2. DIRECTORS & EXECUTIVE MANAGEMENT PROFILES

Zimbabwe Consolidated Diamond Company (Pvt) Ltd is governed through the Board of Directors which takes accountability for the business strategy and performance. The day to day running of the business is delegated to executive management who are accountable to the Board for the execution of the agreed strategy.

TheprofilesoftheBoardmembersandKeyExecutiveManagementaredetailedbelow.

2.1. NON-EXECUTIVE DIRECTORS 2017

Mrs Slava Grace ChellaBoard Chairperson

Slava Grace Chella (Acting Board Chairman)

Mrs Grace Chella took over as ZCDC board chairperson in 2017, taking over from the ZCDC interim board chairperson Professor Gudyanga.

MrsChellaisthefirstblackwomaninZimbabwetoattainfellowshiptotheInstituteofCharteredSecretariesandAdministrators(ICSA) in 1986. She became an Associate member to the Institute of Directors in 2001, and later attained Fellowship to the same institute in 2003.

Mrs Chella has held senior management positions at the following organizations amongst others, Systems Technology (Pvt) Ltd, Climatec (Pvt) Ltd, Cairns Chemicals (Pvt) Ltd, Minerals Marketing Corporation of Zimbabwe (MMCZ), Ministry of Finance and Economic Development, Anglo American Corporation, Zambia National Provident Fund.

Currently she sits on various boards including Ariston Holdings, PG Industries, Imara Asset Management, Quality Governance Centre. She Reserve Bank of was previously a Board member of Rainbow Tourism Group, Zimbabwe Power Company, Deposit Protection, and Zisco Steel.



9

Miracle Muusha (Non-Executive Director)

MrMuushaisregisteredwiththeSouthAfricanCouncilforNaturalScientificProfessionsandAustralian Institute of Geoscientists. He has vast knowledge in the planning and execution ofexplorationprogrammesinbothgreenfieldsandbrownfieldsstagesthroughinvolvementin base metals, coal, and gold and diamonds deposits evaluation. Mr Muusha has special expertise in the evaluation, development and production of small to medium size diamond mines. He has done independent geological consultant work for various corporations including amongst others Debswana Diamond Company &Diamond EX Limited (Botswana), Marange Resources Limited, Diamond Mining Corporation (Zimbabwe) and Pangolin Diamonds Corporation (Canada).

Alexander Mukwekwezeke (Non -Executive Director)

Mr Mukwekwezeke is a Mining and Minerals Executive and holds, BSc in Chemistry (University of Rhodesia), MSc in Industrial & Administrative Science (City University London), Zimbabwe MineFullBlastingLicense,CertificateinDiamondGrading&Evaluation(DiamondEducationCollegeSA).HehasvastminingknowledgethroughexposureworkingwithKamativiTinMine,Elvington Gold Mine and Sabi Gold Mine. Mr Mukwekwezeke held senior positions with the Zimbabwe Mining Development Corporation (ZMDC) and is the founding Chief Executive OfficerofMbadaDiamonds.Hesaton theZMDCBoardofDirectorsandwasanalternateExecutive Director for Lupgas P/L (IDC special purpose vehicle for the development of methane gas in Lupane). He is a Zimbabwe Representative on the International Atomic Energy Agency (IAEA) Technical Co-operation Project.

Colonel Esau Chiadzwa (Non-Executive Director)

Col. Chiadzwa is currently a Director of Investments in Mining and Energy in the Defence Economic Development Department of the Zimbabwe Defence Forces Headquarters. He holds a Masters’ degree in International Studies with the University of Zimbabwe as well as the Defence and Security Management & Civic Military Relations course with the same institution.

Mr. Miracle MuushaNon-Executive Director

Mr. Alexander Mukwekwezeke Non- Executive Director

Colonel E. ChiadzwaNon-Executive Director



10

DrMpofujoinedZCDCassubstantiveChiefExecutiveOfficeron 1 March 2017, on secondment from the Reserve Bank of Zimbabwe (RBZ) where he was Director, Exchange Control. He has had multi-sectoral experience and expertise in the administration and accounting of the country’s foreign exchange transactions.

In 2005, Dr Mpofu was assigned to establish Homelink (Pvt) Ltd, a subsidiary of the RBZ, instrumental in mobilizing foreign currency remittances and diaspora direct investments. Healso served as the Board Chairman (2014-2016). Dr Mpofu championed the establishment of the Bio-diesel plant in Mt Hamden, and also became Chairman of the Board of Directors.Dr. Mpofu has served as NonExecutive Director in Cairns Holdings (Pvt) Ltd, Tuli Coal, Zimbabwe Mining Development Corporation (ZMDC), Minerals Marketing Corporation of Zimbabwe (MMCZ) and ZimTrade. He served as National Chairman of the Gold Mobilisation Technical Committee.From 2010-2015, Dr Mpofu was Chairman of the Technical Team and Chief Negotiator on the Master Loan Facility with China EximBank and conducted an intensive due diligence exercise of the diamond sector to securitize borrowing by Government.

He holds a B.Sc in Economics from the University of Zimbabwe (1990), an M.Sc in International Economics, Banking and FinancefromtheUniversityofWales(UK)andaPhdinBusinessAdministration from Washington International University. Dr Mpofu holds a Doctorate of Business Administration

(DBA) from the Common Wealth University, a Master Class Certificate in Business Management and Leadership fromLondonGraduateSchoolaswellasanExecutiveCertificateinMining Value Chain Management from the Zimbabwe School of Mines.

Dr Mpofu holds an International Executive Development ProgrammeCertificatefromtheUniversityofWitwatersrandand an International Executive Development Programme CertificatefromLondonBusinessSchool.

Dr Mpofu was instrumental in the crafting and implementation of ZCDC’s Diamond Mining Business Model which has brought organizational stability, business growth and miningsustainability. Under his leadership, ZCDC has successfully transitioned from an alluvial to a conglomerate based mining model through investment in both mining and processing capacity. The Company s balance sheet has grown from $38 million in 2016 to $259 million as at 31 October 2018.

Dr Mpofu has received a number of awards for leadership and excellence in his role as CEO of ZCDC from leading industry bodies such as the Zimbabwe National Chamber of Commerce (ZNCC), Megafest Awards, Zimbabwe Leadership Awards, Corporate Social Responsibility (CSR) Network and Buy Zimbabwe Campaign. ZCDC has also received various accolades for operational excellence and Corporate Social Investment under Dr Mpofu’s stewardship.

2.2. EXECUTIVE MANAGEMENT

THE CHIEF EXECUTIVE OFFICER DR MORIS BEKEZELA MPOFU



11

Roberto De Pretto (Chief Operating Officer)

MrRobertoDePrettoisthesubstantiveChiefOperatingOfficerwitheffect1October2017. Mr De Pretto, a mineral processing engineer, has an extensive and well established 32-year

career in the Southern African diamond mining industry having worked for De Beers, Anglo American and Diamcor. His experience spans operational, technical, project and managerial roles.Healsogainedsignificantexperienceincoal,platinum,ironoreandbasemetals.

Mr De Pretto is a registered Professional Engineer with the Engineering Council of South Africa, a Fellow of the Southern African Institute of Mining and Metallurgy and a Member of the South African Institute of Chemical Engineers. Mr De Pretto holds an MSc (Eng) (Metallurgy) and a BSc (Eng) (Metallurgy) from the University of the Witwatersrand. He also earnedaManagementAdvancementProgrammeCertificatefromtheSchoolofBusinessAdministration at the same university.

Charles Gambe(ChiefFinanceOfficer)

Charles Gambe is an experienced finance practitionerwithmore than 25 yearsworkingexperience up to Finance Director Level.

Charles has worked in finance for several reputable companies including UBM Limited,UBM-Pandl (Pvt) Ltd, PG Industries, Innscor and Delta Beverages.

Charles holds a Master of Business leadership with UNISA and a BAcc Honours with the University of Zimbabwe. He served articles with Deloitte and Touché, where his portfolio involved audit of several mining companies including the Lonrho and Bindura Nickel Corporation.

Samukeliso Ndebele [Company Secretary]

A holder of a Bachelor of Law (Honours)(HBL), Bachelor of Laws (LLB) degrees, both from the University of Zimbabwe, Masters in Law (LLM) from Dundee University (Centre for Energy, Petroleum, Mineral Law & Policy), Scotland and Master of Business Studies (MBA) from the University of Natal, South Africa.

Have 25 years’ experience in legal, of which 23 years are in corporate secretarial work and 14 years in Human Resources management. She previously worked as a magistrate at Bulawayo Magistrates’ courts, a Senior Legal Advisor for Bulawayo City Council, Senior ContractsOfficer-BHPMineralsZimbabwe (Pty)Ltd,LegalAdvisor,Tenders&ContractsManager – TelOne (Pvt) Ltd, Company Secretary and HR Manager BP & Shell Marketing Services (Pvt) Ltd. Joined African Century as Group Company Secretary in March 2012 and subsequently added to the legal and secretarial role, the portfolio of HR Director for Lake Harvest Aquaculture (Pvt) Ltd (a subsidiary of African Century Foods Ltd) and Environmental Social Governance Lead for African Century Foods Ltd responsible for Zimbabwe, Zambia, Mozambique and Uganda.

Company Secretary of Zimbabwe Consolidated Diamond Company since 1st June 2016. Responsible for legal and corporate services of the company. Appointed by the Chief Justice of Zimbabwe in 2006 as an assessor of the Administrative Court on Telecommunications matters.

Mr. R. De PrettoChief Operating Officer (COO)

Mr. Charles Gambe Chief Finance Officer

Samukeliso NdebeleCompany Secretary



12

Mrs Masciline Chikoore

Chief HR Officer

Masciline Chikoore[ChiefHumanResourcesOfficer)

Masciline started her working career in the Public Sector where she worked as a Work Study specialist in 1988. She then joined the then Post and Telecommunications Corporation (PTC)in1991asSeniorHumanResourcesOfficer.FollowingtherestructuringofthePTC,she was appointed Pay and BenefitManager, taking charge of the company’s pay andbenefitpolicies.

In 2002, she left the telecommunications industry to join Cernol Chemicals as a Human Resources Manager. Upon the merger of General Beltings and Cernol Chemicals to form GB Holdings in 2005, Masciline was elevated to the Group Human Resources Executive position. Masciline accepted an offer to join Telecel Zimbabwe in 2013 where she was the Human Resources and Training Manager up to May 2016 when she was appointed Chief HumanResourcesOfficerforZimbabweConsolidatedDiamondCompany.

Masciline holds a Masters in Business Administration from the University of Zimbabwe, a BSc Honors in Political Science and Administration also from the University of Zimbabwe, and an IPMZ Personnel Diploma from the Institute of Personnel Management Zimbabwe.

Dr Cleopatra Mutisi (Internal Audit Executive)

Education :

• PhD in Tax Policy -USA• MBAFinance–UK• MATaxation–UK• Diploma in Tax Audit – USA• Advanced Diploma in Taxation – Zimbabwe• Higher National Diploma in Accounting – Zimbabwe

Work Experience:• Zimbabwe Revenue Authority: Am an expert in, Tax Investigations, Tax Audit, Tax Compliance

and Risk, Domestic Taxation, Tax Compliance and Risk, Customs and Excise, Tax and Customs policy and administration reforms.

• Part Time Lecturer – Taxation National University of Sciences & Technology (NUST) January 2006 – 2011 Bulawayo, Zimbabwe Lectured in the BCom Fiscal Studies programme in 2006 and taking the, Tax Policy, Tax

Reform, Customs Policy, Tax Audit, Transfer Pricing, Forensic Auditing, Tax Compliance and Tax Investigations Modules.

• An Accountant by background and an Auditor, Investigator, Internal Controls, Tax/Customs Policy Expert by practice.

• I have made several national and international presentations on Tax and Customs policy and administration reforms.

• A holder of a PhD in Tax Policy, MBA in Finance, MA in Taxation (passed with Distinction) Higher National Diploma in Business Studies, Fellow of the Institute of Tax Auditors, Postgraduate Diploma in Applied Taxation (Certified Tax Accountant) and AdvancedCertificate inTaxandCustoms. I also taughtpart-time in theMScFiscalStudiesat theNational University of Science and Technology.

Board Membership• Zimbabwe Broadcasting Corporation (ZBC)• KaribaHydroPowerCompany(ZESA)

Dr. C. MutisiAudit Executive



13

• Zimbabwe Tourism Authority• Lunah Holding P/L Honors & Awards• SRC Academic Honorary Colours – Passed with a Cum Laude (Distinction) MA in Taxation• University of Bournemouth – England Students Representative Council – June 2006.This

honor is given to students who excel and complete their courses/programs and pass with a distinction!

• Dean’s List Award for Academic Excellence – University of Bournemouth – England, Dean of Faculty – Economic And Management Sciences – Passed with a Cum Laude (Distinction) June 2006. Award is given in honor to students who successfully complete their program and pass exceptionally well and with distinction.

Andrew Murwisi (Engineering Executive)

Andrew. E. Murwisi is an engineering professional with 19 years experience. He has extensive mining experience in precious metals, base metals and precious stones including diamonds. He is a holder of a Masters in Business Administration Degree (MBA) with the Midlands State University (MSU) and a Bachelor of Technology Degree in Industrial and Manufacturing Engineering with the National University of Science and Technology (NUST). HeisaholderofcertificateinWorkingEnvironmentManagementandAppliedeconomicsfrom the Harare Institute of Technology (HIT) and is an accredited NOSA auditor. Andrew’s Engineering carrier spans back from 1995 when he started an apprentice trainee Fitter and TurnerandhasrosethroughtheEngineeringrankstobecomeaqualifiedEngineer.Workedas head of Engineering, Sales and Marketing for Stewart and Lloyds group from (2001-2004).

Moved into the mining industry in 2004 and started as a Mine Engineer with ZMDC based at Elvington Gold Mine. Rose through the ranks to become Group Projects Engineer for all ZMDC mines and achieved the Group Engineer position before moving on to Zimasco (Pvt) Ltd in 2008. Worked for Zimasco as divisional operations engineer and rose to the position of divisional Engineering Manager from (2009-2011). Moved to Caledonian Mining Corporation Blanket mine and worked as a Resident Mechanical Engineer (2011-2013). Andrew re-joined the diamond industry in 2013 and worked for Mbada Diamonds as the Engineering Executive, a position he held for two years before being promoted to become a Strategic Business Unit Manager/ General Manager for the DMS plants. He left Mbada Diamonds in 2015 and had a short stint with Mettalon Gold Mine where he worked as an Engineering Manager. At the consolidation of Diamond mines in the Marange area, he was hired as an Engineering Executive.

Levy Chiota (Mine Manager – Chiadzwa Portals)

Levi is an experienced Mining Engineer with over 28 years of work experience. He started his working career in the mining sector in 1988. He has worked for various mines since then and has occupied junior, middle level, senior level and executive positions. Levi has worked for Shabanie & Mashaba Mines (based at Shabanie Mine), Bindura Nickel Corporation (Trojan Mine), Mimosa Mine, Zimbabwe Alloys, Konkola Copper Mines (Zambia) andZimplats.

Levi is a holder of a BSc Honors Degree in Mining Engineering from the University of ZimbabweandaMineManagers’CertificateofCompetency.

Engineer Andrew Murwisi Engineering Executive

Levi Chiota Mine Manager Chiadzwa



14

Richard Mabaya (Mine Manager – Chimanimani Portals)

Richard has a mining career spanning almost three decades after graduating from the University of Zimbabwe with a BSc Honours Degree in Mining Engineering in 1989. Richard also holds a Diploma in Business Management from UNISA. He is a Professional Engineer registered with The Engineering Council of South Africa, a member of SAIMM as well as the Association of Mine Managers of Zimbabwe

He is an experienced and versatile Mining Engineer with extensive local, regional and international exposure. His experience covers Coal, Chrome, Copper, Nickel, Lead, Zinc, Platinum, Gold & Diamond mining in both Open Pit & Underground Mines in both Planning & Production.

His career started with Anglo American Bindura Nickel Corporation at Trojan Mine. He rose through the ranks to become Mining Manager at Madziwa Mine. Subsequently he worked for BHP Hartley Platinum, Zimasco, Pan African Mining, C Mine & Trojan in various roles up to Mine Manager. In 2008 he left Zimbabwe for Namibia joining Exxaro’s Rosh Pinah Mine as Chief Mine Planning Engineer. In 2013 Richard joined BCL in Botswana as Mine Manager.

He then returned to Zimbabwe joining ZCDC in July 2017.

Sabastan Mabenge (Metallurgy Executive) Sabastan is an experienced metallurgist with over 22 years of work experience. He has worked for various companies including Ashanti Goldfields, SENET CC (South

Africa), Vergenoeg Fluorspar Mine (South Africa), Mabkav (South Africa) and Marange Resources.

Sabastan is a holder of MBA (General), Post Graduate Diploma in Project Management and Metallurgical Engineering (Honours).

Owen Chatambudza Chihota (Mineral Resources Executive)

Owen has 25 years of experience as a geologist. Has vast experience in exploration, evaluation and mining geology.

Joined ZCDC in April 2016 as a Geology and Evaluation Manager and commenced acting in the position of Mineral Resource Executive in September 2016 to May 2017. Worked for Marange Resources (Pvt.) Ltd as an Exploration and Mine Geologist from 2012 to 2016.

Prior to joining Marange Resources (Pvt) Ltd, he had worked for Zimasco (Pvt) Ltd for four years as Resource Evaluation Manager for Shurugwi and South Dyke division. Before moving to Zimasco ( Pvt) Ltd worked for Shabanie and Mashaba Mines (Pvt) Ltd for six years as Manager Technical Services, two years as Resident Geologist Gaths Mine and Seven years as Production Section Geologist Shabanie Mine.

Owen is holds a Bsc Honours Degree in Geology from University of Zimbabwe and a Masters’ degree in Business Administration from Zimbabwe Open University.

He is a member of SAIMM and Geological Society of Zimbabwe.

Mr. Richard Mabaya Miner Manager Chimanimani

Mr. Sabastan Mabenge Metallurgy Executive

Owen Chihota Mineral Resources Executive



15

Clement Munoriarwa (ChiefSecurityOfficer)

AttestedintheZimbabweRepublicPolicein1982asaPatrolOfficer.TrainedatMorrisDepotandworkedasaPatrolCommander, TroopCommanderandFieldOfficerwithSupportUnit.WorkedasaSuperintendentDistrict,OfficerCommandingDistrict,DeputyOfficerCommandingProvinceandeventuallyOfficerCommandingProvince.

WorkedinstaffappointmentsasStaffOfficerTransport,SeniorStaffOfficerPersonnelServices,SeniorStaffofficerOperationsandasChiefStaffOfficerHumanResourcesinthe Zimbabwe Republic Police.

Appointed Police Administrator for the United Nations VerificationMission in Angola(1993-1994). Appointed Police Deputy Planning Coordinator for the United Nations Mission in Liberia (2003-2005). Appointed Police Planning Coordinator for the United Nations Mission in Sudan (2006-2010). Acted United Nations Police Commissioner for the United Nations Mission in Sudan (9/2009-3/2010). Retired from the Zimbabwe Republic Police on promotion to the rank of Commissioner in May 2016.

ACADEMIC/PROFESSIONAL QUALIFICATIONS.• Master of Commerce in Strategic Management (Great Zimbabwe University, ZIM)• Executive Development Program (University of Zimbabwe, ZIM)• DiplomainManagementStudies(NottinghamTrentUniversity,UK)• DiplomainManagement(HenleyCollege,UK)• Diploma in Personnel Management (IPMZ, ZIM)• Joint Command and Staff (Zimbabwe Staff College).• CertificateInternationalSeniorCommandCourse(RoyalMalaysiaPoliceCollege

Dr Newton Demba (Supply Chain Executive) Newton Demba is the Supply Chain Executive for the company primarily responsible

for providing strategic leadership, oversight and coordination role in the Supply Chain Services. This mandate includes developing and implementing a vision for a value-addition, strategic sourcing, procurement operations and logistics management function. A key requirement is the ability to drive change across the organization to ensure an efficient, cost effective supply chain while maintaining high customer service levels.Newton is a strategist with more than 14 years’ experience in Supply Chain Management and Administration in the telecommunications, public health and manufacturing sectors. His key competencies, experience and expertise are in the development and implementation of supply chain and administration strategies, development and implementation of operational systems, policy and procedures, strategic global sourcing strategies, contracts management, logistics operations, warehousing and inventory management, and transport operations.

Prior to joining the company, Newton was with Econet Wireless Zimbabwe, a privately helddiversified telecommunicationsgroupwithoperationsand investments inAfrica,Europe,SouthAmerica,NorthAmericaandtheEastAsiaPacificRim,offeringproductsand services in the core areas of mobile and fixed telephony services, broadband,internet,satelliteandfibreopticnetworks.Thecompanyalsohasinvestmentsbeyondthetraditionaltelecomssector,whichincludefinancialservices,insurance,e-commerce,renewable energy, education, Coca-Cola bottling, hospitality and payment gateway solutions. He played an instrumental role in the establishment of Network Cost Optimisation department and Power Business Unit with key focus on Supply Chain/

Mr C. Munoriarwa Protection Services and Surveillance Executive.

Dr. Newton DembaSupply Chain Executive



16

logistics management.Newton is a Non-Executive Director with Eminence Management Consultancy, a company which provide consulting services in Strategy formulation and implementation, change management, Team building facilitation, stakeholder and workshop facilitation and Supply Chain Management Services. As a consultant, he has facilitated strategy formulation and implementation process, change management and team building sessions for various organisations in Zimbabwe. His research interests are in supply chain modelling, leadership and change management.

Newton holds a Doctorate degree in Strategic Management (USA), Master of Science degree in Strategic Management (ZIM), Bachelor of Science (Honours) degree in Sociology and Social Anthropology (ZIM), Advanced International Diploma in Logistics and Transport (CILT, UK) an InternationalDiploma in Logistics andTransport (CILT,UK).Newton is a certifiedLogistics practitioner and is a Chartered Member with the Chartered Institute of Logistics and Transport International.

Mr. Dennis Mtombeni (Mine Manager Portal R)

• Dennis has mining experience spanning for the last 26 years including gold, graphite,

platinum, diamonds and Industrial minerals as well contracting.

• Started as cadet with Falcon Gold, was involved in major projects including Eureka Gold

Project, 1998 as Pit Superintendent, Ngezi Platinum Project, 2001 as Production

Engineer, River Ranch Diamond Mine, 2006 as Mine Manager and the development of

Pickstone-Peerless Project, 2015 as Mine Manager.

• Dennis holds a Master’s Degree in Business Administration (MBA) from the Midlands

State University, Mining Diploma from the Zimbabwe School of Mines and a Post

Graduate Diploma in Business Leadership from the Zimbabwe Open University.

• Member of the Association of Mine Managers of Zimbabwe (AMMZ).

• Member of the Southern African Institute of Mining and Metallurgy (SAIMM).

Mr. Dennis MtombeniMine Manager Portal R



17

INCOME STATEMENT

BALANCE SHEET

CASHFLOW

3. HIGHLIGHTS



18

CHAIRMAN’S STATEMENT

Introduction

I take a distinguishable honour in presenting the 2017 financial year report of Zimbabwe Consolidated Diamond Company, on behalf of the Board of Directors.

The company’s performance and prospects for the future is against the background of continued positive commitment from the company’s executive management and staff, the positive economic prospects for Zimbabwe ushered in by the New Dispensation on the 24th of November 2017 and successful implementation of the Diamond Mining Business Model (DMBM) to turnaround the fortunes of the company. It is such commitment, positive prospects and intervening strategies which saw diamond production rising from 961,537 carats (ROM) achieved in 2016 to 1,776,384 carats (ROM) achieved in 2017, translating to 85% production growth.

The equity capital injection of US$80 million by the Government ofZimbabwe,beingZCDCmajorshareholder,hassignificantlystrengthened the company’s capital base and has set ZCDC on a solid path to champion diamond mining and processing inthecountry.Theequityinjectionalsosignificantlyenabledthe company on successful transition from alluvial diamond mining to conglomerate diamond mining, as rich alluvial diamond resource got depleted. Exploration is however, continuing in search of rich diamond deposits and kimberlitic resources.

It is pleasing to note that two additional portals were brought on production line during the year under review, namely Portal A (ex-Mbada) and Portal E (ex-DTZ-OZ) after successfully

gaining access into those portals. Portal Q was placed under exploration during the 2nd quarter of the year to allow further exploration & evaluation of the diamond resource in the portal. Diamond production was therefore concentrated in four portals, namely Portal A, Portal B, Portal E and Portal Q (1st four months of the year). The following table summarizes diamond production achieved during the year:

Portal Mineral 2017 Actual Diamonds Produced (carats)(ROM)A Diamond 462,334B Diamond 1,212,955E Diamond 57,847Q Diamond 43,248Total Diamond 1,776,384

Exploration work continued in the following portals to evaluate diamond resource in those portals and in preparation for future operations expansion:

• Portal E• Portal D • Portal G• Portal L1•PortalJ,I2&K• Portal C & L2

Following recapitalisation of the business and lines of credit obtained during the year, diamond production and exploration activities are expected to further ramp-up going forward. The operations are however, equally adversely affected by limited and delayed availability of foreign currency to import most of the operations’ capital equipment.

Slava Grace Chella (Acting Board Chairman)



19

Financial ReviewThe company recorded gross turnover of US$5.6 million during the year down from US$42.1 million recorded in 2016. Comprehensive loss for the year was US$19.5 up from comprehensive loss of US$7.4 million recorded in 2016. The comprehensive loss realised during the year was attributable mainly to the following operational challenges experienced during the year:

• Suspension of sales: - ZCDC noted that the diamond marketing and sales framework was distorted as its diamonds were being sold at undervalued and depressed prices due to inefficiencies and bottlenecksin the downstream Diamond Value Management (DVM) processes. ZCDC then took a deliberate decision to temporarily withdraw from the market and suspend diamond auctions in 2017 and resumed sales in the last quarter 2018. Due to low sales volumes during the year, the company held diamond stocks totalling 1,568,867 carats as at 31 December 2017.

• Foreign Currency constraints: - ZCDC’s operations were equally adversely affected by foreign currency challenges facing the nation. This hampered acquisition of adequate capital equipment and production consumables required for operations. Engagement of RBZ continued to be done for retention of some of the forex from the planned export sales proceeds and prioritisation on foreign currency allocations.

The Company balance sheet grew by 476% with total assets of US$218.6 million in 2017 up from US$37.9 million in 2016. This followed recapitalization of the business during the year.

Litigation and Legacy IssuesLitigation over consolidation, legacy issues involving former diamond mining companies’ (Marange Resources (Pvt) Ltd and Diamond Mining Company (Pvt) Ltd)’s creditors and matters arising from the company’s operations were

reported in the period under review. ZCDC had to advance $20 million to cover these companies liabilities which were becoming a threat to ZCDC business stability. ZCDC is engaging Government with a view to getting a sustainable debt management plan to mitigate these risk exposures and ensure recoverability of the funding advanced to date. Corporate Social ResponsibilityIt is pleasing to note that ZCDC is also playing its part in contributing to the country’s developmental agenda by spearheading infrastructural and social development both at local/community level and national level. Corporate social responsibility forms part of our strategic pillars as an organization. ZCDC hold in high regard, the balance between community, nation and corporate stakeholder interests in the execution of its business.

OutlookWith the recent recapitalization of the business, continued implementation of Diamond Mining Business Model (DMBM) and strong commitment from the Board, management and staff, ZCDC is forecasted to continue on a growth trajectory to achieve its Vision 2030 objectives..

Appreciation On behalf of the Board of Directors I wish to extend my appreciation to the Government of Zimbabwe, Ministry of Mines & Mining Development, the Reserve Bank of Zimbabwe, ZCDC Board members, Executives, Management and Staff for their invaluable contribution during the year.

Mrs Slava Grace ChellaActing Board Chairperson



20

CHIEF EXECUTIVE OFFICER’S STATEMENT

IntroductionI am pleased to report that Zimbabwe Consolidated Diamond Company (ZCDC) experienced a positive and transitional year, notwithstanding that 2017 was a challenging year for the industry and Zimbabwe at large. The results of the Diamond Mining Business Model are beginning to show as the company recorded a commendable improvement in both productivity and investment capacity.

Re-orientation of ZCDC BusinessIn a quest to ensure transparency, accountability, optimal commercial exploitation and viable marketing of Zimbabwe’s diamonds, Government through the Ministry of Mines and Mining Development, consolidated the mining concessions in Marange and in Chimanimani in 2015 after the adopted multi-company model had failed to yield the desired national socio-economic impact.

Government then established ZCDC in 2015 as a 100% Government owned company mandated to mine diamonds from the seven mining concessions which were consolidated under Special Grant 6026 in Marange and Special Grant 6240 in Chimanimani. Prior to the consolidation process, the diamond industry was already in distress with most of the players operating at a loss owing to the depleted known alluvial deposits, falling grades and high stripping ratios. The sector’s combined output had started declining after peaking at 12 million carats in 2012 at the height of rich alluvial diamond mining.

Commencement of Mining Operations ZCDC commenced mining operations in March 2016 relying mainly on tailings and dumps reprocessing, inheriting the challenges which were confronting the industry pre-consolidation, chief among them, depleted rich alluvial resources, lack of exploration and high stripping ratios, the companymadealossof$7.4millioninitsfirst9monthsofoperation in 2016.

The Transition to a Sustainable Business Model Notwithstanding the nature of mining operations which require huge capital investment, planning, investment in exploration and mine development which can translate to years of loss making in the initial 2 to 5 years or even longer, it, however, became apparent that there was need to come up with a new business model which was sustainable for the Marange diamond concessions.

In March 2017, under new management, as a precursor to coming up with an appropriate business model, ZCDC conducted a comprehensive corporate diagnosis to de-bottleneck and de-risk to ensure achievement of operational efficiency and production effectiveness. The diagnosisexposed inherent challenges which confronted the company’s resolve to transform diamond mining in Zimbabwe. Chief amongtheidentifiedbottleneckswerethefollowing;

Inadequate capitalization …If ZCDC had continued with the business models adopted prior to consolidation when alluvial deposits were still economically

DR MORIS BEKEZELA MPOFUTHE CHIEF EXECUTIVE OFFICER



21

exploitable, the company was destined to fail because alluvial diamond mining was no longer sustainable in Marange. The known rich alluvial deposits had been mined out and the remaining alluvial deposits were largely uneconomic for mechanised mining. This meant that without investment in exploration for conglomerate resource definition,conglomerate mining and processing, diamond mining in Marange would seize. It was therefore imperative to capitalize the business in order to facilitate the transition from alluvial to conglomerate mining which required huge capital investments into conglomerate crushing capacity, drilling and blasting and enhanced processing capacity. Upon its establishment in 2015 and commencement of mining operations in 2016, ZCDC was, however, not capitalised to facilitate this transition.

Unresolved Legacy Issues …Some of the former mining companies contested Government’s decision not to renew their Special Grants and approached the courts for recourse. ZCDC was not spared from the legal disputes and in some cases was prevented from working on the concessions under its Special Grant. The resultant effect was that ZCDC could not operate on all the mining concessions under its Special Grant despite incurring security costs on the same.

Systems Development… The Corporate Diagnosis revealed that as a new company, ZCDC needed to develop new systems, policies and standard operating procedure manuals to meet international best practices to ensure operational efficiency and productioneffectiveness.

Low Resource Confidence Levels…Very little exploration had been carried out to define thediamond resources in Marange. With the depletion of the known rich alluvial deposits, more comprehensive exploration was required to discover, define and evaluate the diamondresource endowment in Marange. When ZCDC started mining operations in Marange, the Company relied on speculative mining in the absence of exploration results to guide mining operations and investment into operations.

Ineffective Diamond Value Management Processes…Zimbabwean diamonds were being sold at undervalued and depressedpricesduetoinefficienciesandbottlenecksinthedownstream Diamond Value Management (DVM) processes. Inefficiencies in cleaning, sorting and valuation as well asinadequate marketing and sales frameworks led to depressed pricing for Zimbabwean diamonds.

ZCDC then took a deliberate decision to temporarily withdraw from the market in March 2017 and suspended diamond auctions. This was done to facilitate the reorientation and

capacitation of downstream DVM processes to ensure that there is adequate efficiency and effectiveness required toalign the value addition, marketing and sales framework to international best practice.

Negative Stakeholder perception… When diamonds were discovered in Marange, there were pronounced expectations on the sector to contribute significantly to both national economic developmentand upliftment of the local communities. Contrary to the expectations of many stakeholders, the sector did not manage to make the anticipated contribution. Owing to lack of sustainable local enterprise development projects in the local mining communities, the local community and other stakeholders developed a lack of trust towards diamond mining companies and ZCDC was no exception when it commenced operations. Towards this end, ZCDC adopted a deliberate 3 tier Corporate Social Investment strategy under whichvariousinitiativeshavebeenundertakenforthebenefitof the local community.

The Diamond Mining Business Model (DMBM)…The Corporate Diagnosis was followed by a formulation of a strategic business plan dubbed the Diamond Mining Business Model (DMBM) which was premised on promoting Organizational Stability, Business Growth and Mining Sustainability.

Government capitalized ZCDC to the tune of $80 million in June 2017 to facilitate the implementation of its DMBM. The enactment of ZCDC’s business model followed a 3 Horizon Business Growth Model in line with the McKinsey GrowthModel.

In the first phase which covers the first 18 months ofoperations (June 2017 – Dec 2018), ZCDC was primarily focused on establishing organizational stability. Stability entailed extending and defending the core business through addressing those challenges that inexorably threaten the goingconcernof thebusinessas identified inthecorporatediagnosis.

SHAR

EHO

LDER

VAL

UE



22

During the stabilisation phase, ZCDC addressed the issues relating to unresolved consolidation issues, lack of capitalization, working capital constraints, low staff morale, inadequate systems, business optimization and negative stakeholder relations as well as lack of exploration to establish critical resource detail to inform mining and investment.

In the second horizon, (2019-2021) ZCDC will invest in business growth, this phase will stretch for 3 years. The focus at this stage will be building momentum and growing the business. In order to grow the business, ZCDC has already invested in a 450 Tonne Per Hour conglomerate crushing plant to facilitate transition from an alluvial to a conglomerate based mining model. ZCDC will open dormant mines in Marange after exploration and evaluation work. New mines outside Marange will also be opened together with other greenfieldprojectsoutsideMarange.

ZCDC will now focus on growing its contribution to national income through foreign currency generation and contribution tothefiscus,aswellasemploymentcreation.

Inthethirdandfinalphaseofthethreehorizons(2021-2030),ZCDC will invest in enhancing mining sustainability through investment in exploration programs to create viable sustainable future operations. Sustainability will ensure that diamonds are mined for posterity through emphasis on extending the life of mine and production performance, community social investment and environmental rehabilitation.

ZCDC’s contribution to national growth and development is now poised to become more pronounced as it progresses into thefinalstagesofitsbusinessgrowthhorizonafterachievingorganizational stability.

Operating EnvironmentIn 2017, under new management, ZCDC established that lack of capitalisation was a major contributory factor to low production capacity and attendant performance challenges. Management established that there was need for capitalisation to turn around Zimbabwe’s fortunes in diamond mining. Engagements with potential investors and the shareholder to raise capital continued as the company was undercapitalised. Meanwhile, the shareholder responded positively, and the Ministry of Finance and Economic Development availed $80 million in the form of Treasury Bills through the Reserve Bank of Zimbabwe and ZMDC. The released funds by the shareholder were used to fund capital expenditureandworkingcapital.Thefinancialpositionofthecompany responded positively to the recapitalisation which was undertaken during the year 2017 and capital expenditure and working capital that was released by the Reserve Bank of Zimbabwe. The balance sheet growth was from total assets

of $38 million before capitalisation to $219 million as at 31 December 2017.

ZCDC Achievements after Capitalisation were as follows:• Production doubled year on year, from 961,337 carats in

2016 to 1,8 million carats produced in 2017.• Diamond stock accumulation in 2017 to ensure effective

diamondvaluemanagementandmaximisationoffiscalrevenues. As at the end of December 2017, ZCDC had 1,8 million carats of diamond stock.

• Exploration and evaluation activities increased significantlytofindnewdepositsandtohavesustainablemining plans. Evaluation of existing resources had increased the upgrading of Inferred to Indicated resourcesincreasingresourceconfidencelevels.

• Resource inventory has moved away from alluvial (depleted) to conglomerate, thereby motivating the transition to mining of deep-seated diamond ore.

• Positive engagements with communities and other stakeholders.

• Implementation of ISO standards for SHEQ, compliance with best codes of practice.

• Corporate Rebranding to reposition ZCDC into a world class entity. ZCDC acquired a Diamond Processing and Deep boiling facility with modern technology and appropriate intellectual property to facilitate the cleaning of Zimbabwean diamonds which had been undervalued due to poor cleaning. Through enhanced cleaning ZCDC hasmanagedtorealizeasignificantimprovementinthequality mix of diamond parcels as the true qualities of the diamonds are revealed after applying appropriate cleaning mechanisms.

Operations ReviewThe working capital and capital expenditure funding challenges pre-capitalisation in June 2017 and shortages of foreign currency continued to affect ZCDC production. Zimbabwe similarly was also still experiencing several challenges on major economic fundamentals. These challenges continue to be a real and persistent threat to the mining industry which is capital intensive with a high operating cost base.

• During the year under review, ZCDC produced 1,776,384 carats of diamonds (2016: 961,537 carats) translating into an 85% increase. This was the result of the fact that during 2017 the company managed to have access to two more portals namely Portal A and Portal E. At its inception in 2016, the Company had access to Portal B and Q. In addition, in 2017 production was ramped up by capital injection by the shareholder and investment in conglomerate diamond resource. However, due to depleting alluvial ore resource, production went on a downward trend during third and fourth quarter of



23

2017.2016 production was predominantly affected by low equipment availability due to low capitalisation. An accelerated development exercise has been implemented and is expected to yield positive returns duringthe2018financialyear.Productionrampupgoingforward will be reliant on investment in conglomerate diamond ore resource. All the other operational variables remained strong showing an improvement compared to 2016.

The decision to exit the marketOn realization that Zimbabwean diamonds were being sold at undervaluedanddepressedpricesdue to inefficienciesandbottlenecks in the downstream Diamond Value Management (DVM) processes, ZCDC took a deliberate decision to temporarily withdraw from the market and suspend diamond auctions. This was done to facilitate the reorientation and capacitation of downstream DVM processes to ensure that there is adequate efficiency and effectiveness required toalign the value addition, marketing and sales framework to international best practice. Failure to properly clean rough diamonds was in some instances resulting in diamonds which could otherwise have been classified as Gem orNearGemdiamonds,beingclassifiedandsoldas Industrialdiamonds due to failure to properly clean the diamonds with the appropriate technology and systems.

Lack of adequate skills and capacity in sorting and valuation also contributed to loss of value through undervaluation. An inadequate marketing framework further exacerbated the valuelossasitfailedtoattractadiversifiedpoolofinternationalbuyers to participate at local diamond auctions. Resultantly thecountrywaslosingsignificantvalueduetoinefficienciesin cleaning, sorting, valuation and marketing systems owing to inadequate capacity, resources and investment into downstream DVM processes.

Realising the need to preserve and enhance diamond value for Government, ZCDC suspended selling diamonds for the entire period of March-December 2017, and entered into a funding agreement with Government, through the Reserve Bank of Zimbabwe.

The 2017 production which was accumulated as holding stock of 1,8 million carats will all be sold in 2018/19. As at end of December 2018, ZCDC would have accumulated diamond stocks of 3.2 million carats and has a sales plan of 5 million carats in 2019.

Re-orientation of DMBMIn order to ensure continuity in diamond mining through enabling transition from alluvial to conglomerate mining and to ensure stability of the business, the Government of

Zimbabwe capitalised ZCDC with $80 million to fund the capital expenditure and working capital, aimed at creating exploration, mining and processing capacity.

Aspartofthisstrategytopromoteconfidencemininginformedby geological information, ZCDC invested over $7 million in 2017 to procure exploration and evaluation equipment comprising of excavators, dump trucks and diamond drill rigs. Further investment was made to procure geological software andgeophysicsequipmenttoexpediteandeffectivelydefinetargets for evaluation and for ore body modelling and resource estimation.

With supporting conglomerate resources identified andpositive business optimisation and feasibility analysis, ZCDC invested in enhancing mining and processing capacity for conglomerate mining in Portal A and Portal B by investing into a 450 tonnes per hour conglomerate processing plant, which is currently the biggest crushing pant in the country. The total investment into the plant was $25 million.

ZCDC has invested in the reorientation of the mining model from alluvial based model which was not anchored on extensiveexplorationandevaluation topromoteconfidencemining and discovery of new deposits, to a more investor and shareholder value enhancing model which focuses on resourcedefinitionandconfidencemining.

The Company embarked on an extensive plant and equipment capacitation programme by purchasing Belarus equipment, conglomerate plant, and additional crushers and earthmoving vehicles. The total investment into production capacitation amounted to $100 million. This programme started in 2017 and remains an ongoing phased exercise aimed at improving machine and equipment availability. The conglomerate crushing plant was commissioned in August 2018, and in the last quarter of 2018 has been undergoing optimisation to ensure operational efficiency and production effectiveness.The equipment investment programme was also aimed at capacitating ZCDC to migrate from contract mining to owner mining.Thisinitiativeisexpectedtoresultinsignificantcostsavings and increased production.

In 2017, the company also invested $7,1 million towards exploration and evaluation to promote confidence mining.In 2018, ZCDC will initiate further extensive exploration and development exercise directed at unearthing more mineral groundtopromoteconfidencemining.

Capacitation of downstream processesIn 2017, through various engagements, exchanges and benchmarking exercises with other diamond producing countries and stakeholders, ZCDC implemented a host of



24

strategies to enhance effective Diamond Value Management across its entire value chain, especially in downstream processes.

In 2018, ZCDC intends to invest in Sorthouse infrastructure and technological systems that match international best standards. This includes state of the art hands free sorting equipment to minimise product security risk and enhance efficiency and effectiveness in sorting and evaluationaccording to client required parcel assortments.

ZCDC has also invested in capacity building to match the growth in production as it implements its business growth strategy as per its Diamond Mining Business Model. Through technical partners from diamond producing countries ZCDC commenced the process of building capacity in sorting and valuation through skills transfer, technical assistance and information exchange. ZCDC also acquired a Diamond Processing and Deep Boiling facility which it is in the process of upgrading and resourcing with modern technology and appropriate intellectual property to facilitate the cleaning of diamonds. Through enhanced cleaning, ZCDC has managed to realise a significant improvement in the quality mix ofdiamond parcels as the true qualities of diamonds are revealed after applying appropriate cleaning mechanisms.

ZCDC values the contribution of the local Cutting and Polishing Industry to the dictates of the Government’s mineral valueadditionandbeneficiationthrust. In this regard,ZCDCwill in keeping with the legal requirement, preserve 10% of its production for local cutting and polishing companies. Engagements are underway with international certificationcompanies to set up certification laboratories in Zimbabweto support the envisaged growth in the diamond industry in Zimbabwe. ZCDC’ s strategy to reorient and capacitate the downstream Diamond Value Management processes is set to yield significant value for Zimbabwe through thepromotionofresponsibility,transparency,effectivenessandefficiencyatevery stage of the diamond mining value chain.

Financial OverviewThe Company posted revenue of $5,6 million in the current year under review, compared to $42,1 million for the same period last year. The decrease is largely attributable to fact that, during the year the Company took a deliberate decision to temporarily withdraw from the market and suspend diamond sales. This was done to facilitate the reorientation and capacitation of downstream Diamond Value Management processes to ensure there is adequate efficiency andeffectiveness required to align value addition, marketing and sales framework to international best practise.

Operating expenses for the period increased from $10,8

million in 2016 to $15,6 million in 2017. The increase in cost was mainly due to increased operational activity after capitalisation of the Company.

As a result of the factors mentioned above, an operating loss of $19,6 million compared to a loss of $7,4 million which was recorded in the same period last year. The operating loss was realised against diamond stockholdings valued at $116 million @ current prices.

TheCompany’sstatementoffinancialpositionimprovedwithtotal assets increasing from $37,9 million in 2016 to $218,6 million in 2017, due the capitalisation of the business and increased investment in plant and equipment. Shareholder’s equity increased from a negative position of $7,4 million to a positive position of $52,9 million.

Capital expenditure for the period amounted to $81,7 million, wellbehindplanduetodifficultiesinsourcingforeigncurrencywhich caused substantial delays in various capital projects that had been planned. ZCDC will continue to reinvest in improving its operations in line with the availability in foreign currency.

Human Resources and Industrial RelationsZCDC’s staff complement averaged 1 262 for the year. Additional skilled and experienced staff were also recruited during the year to further capacitate the Company in the execution of its strategic goals. I believe that the additional and existing staff complement consists of the right talent and skills necessary to execute and implement the ZCDC’s Vision 2030and fulfil itsmandate. The Industrial relations climatewassoundduringthe2017financialyear.

Community and EnvironmentZCDC continues, as part of its business strategy, to engage with the communities within which it operates as this gives the Company the critical SOCIAL LICENCE for business growth and sustainable mining. Community projects continued unhindered in 2017 and evident activity was recorded in infrastructure development, health, education, entrepreneurship, sports and recreation, agriculture and social amenities. To this end, the following projects were successfully undertaken in 2017:

• Education support in form of school fees assistance for the underprivileged childrenwithin our community;renovations & equipping of science & computer laboratories, painting of class room blocks, administration and teachers’ accommodation for local schools,

• Support skills development for local communities through setting up of a vocational training centre running sewing training programs for the community so that



25

some of ZCDC protective clothing requirements will be purchased from the training centre thereby economically empowering local communities.

• Infrastructure development in form of community boreholesrepair,drilling&installation;roadmaintenancefor major local community roads; renovation ofcommunity clinics.

• Health cluster support through free medical consultations and treatment to all locals at the mine clinic, locals constitute an average of 30% of the total patientsattendedtoattheclinic;solarelectrificationoflocal clinics and assistance with supply of most drugs for chronic diseases.

• Agriculture support for local communities through establishment of tillage program. To this end, ZCDC procured 3 tractors for community tillage program and bearsalltheoperatingcostsforthisprogram;provisionof free seeds and fertilizers to local community. This program is aimed at complementing government initiatives of ensuring food security in the country.

• Employment of local people within our operations. We are investing in the community through creating employment opportunities for the local community. Currently, 45% of ZCDC’s workforce is drawn from Manicaland.

• Local community economic empowerment and employment creation through support of small to medium local enterprises and cooperatives through procurement of our staff canteen supplies from locals.

ZCDC also invested into the rehabilitation of the environment left degraded from previous mining activities, prior to consolidation.

OutlookWe are encouraged by the opportunities that are being presented by an economy that is opening up to the world.

ZCDC is hopeful that in the medium to long term, the country will restore business confidence and offer goodprospects for sustainable growth. A key milestone for 2018 is the commissioning of the 450tph plant and 52 units of Belarus EMVs which is aimed at increasing production capacity. An aggressive exploration thrust, is expected to grow the Company’s ore reserve base leading to an end to blind mining. The last quarter of 2018 has also seen the successful resumption of diamond sales and 2019 will offer a turnaround in the company’s objective of foreign currency generation, fiscal contribution and employment generation.The Company expects to increase its control over some operational functions which are currently being out-sourced aspartofmanagementandoptimisationofefficiencies,andtostrengthenZCDCprofitabilityandbalancesheet.Giventhecapital-intensive industry in which ZCDC operates and its Vision 2030 objective of investing $400 million over the next 5 years, we further look forward to the introduction of facilities and policies that avail-long term affordable funding, as access to such funding remains a challenge.

AppreciationI would like to thank the ZCDC team, for their dedication, professionalism, commitment and belief in the ZCDC’s vision. I would also extend my gratitude to our Board of Directors for their counsel and guidance. Lastly, I would like to thank our valued shareholders and stakeholders for their continued interest and support in 2017.

Dr Moris Bekezela Mpofu-(ChiefExecutiveOfficer)



26

CORPORATE GOVERNANCE STATEMENT



27

6. CORPORATE GOVERNANCE STATEMENT

The Company operates through a Board of Directors (“the Board”) which is the main policy and strategy decision maker. The Board is cognizance of the importance of upholding good corporate governance practices and is committed to conduct and ensure that management and all employees undertake the business of the company with integrity, professionalism and sound judgement. The Board is accountable to the Shareholder and other stakeholders and strives to create stability, growth and sustainable shareholder value.

Zimbabwe Consolidated Diamond Company (Private) Limited was incorporated on 2nd July 2015 under the Companies Act, [Chapter 24:03]; registration number4943/2015. The Company carries out mining operations in the Chiadzwa diamond mining fields under SpecialGrant 6026, and in the Chimanimani diamond mining fieldsunderSpecialGrant6460.

Director Appointments and Retirements During the year ended 31 December 2017 there were no

appointments of new directors. The Board Chairperson (Professor F P. Gudyanga) resigned from the board in May 2017. Mrs S Chella was appointed Acting Board Chairman from May 2017.

A new Board was appointed in June 2018, and comprises seven non-executive members.

Shareholding The company is 100% owned by the Government of

Zimbabwe, through the Zimbabwe Mining Development Corporation.

6.1. BOARD MANDATE The mandate of the Board of Directors is to set the

Company’s strategy and to regularly review the strategic direction and ensure optimal performance of the business. It supervises executive management to ensure that Board decisions and direction are implemented in the interests of the shareholder and all stakeholders.

The Board also provides an oversight on the business operations to ensure adherence to corporate governance and compliance tenets by the organisation. In this regard the Board ensures that the company complies with requirements of the National Code on Corporate Governance, Zimbabwe, King Code of GovernancePrinciples(KingIV),theCompaniesActChapter24:03,the

Memorandum and Articles of Association of Zimbabwe Consolidated Diamond Company (Pvt) Ltd, and all applicable laws. The Board ensures that the company practices good corporate citizenship by ensuring that the operations adhere to all legal requirements and by investing in sustainable community programs. The Board is ultimately accountable to the Shareholder to deliver and realise value for the shareholder.

6.2. BOARD COMPOSITION 2017 During the year 2017, the Board comprised of five (5)

non-executive members, four (4) males and 1 female. During the year 2017 the Zimbabwe Consolidated

DiamondCompany(Pvt)Ltdwasconstitutedasfollows;

** Professor Francis Gudyanga Interim Board Chairman

** Mrs. Slava Grace Chella Acting Board Chairman

Mr. Alexander Mukwekwezeke Non-Executive Director

Mr. Miracle Muusha Non-Executive Director

Colonel Esau Chiadzwa Non-Executive Director

** Professor Francis Gudyanga resigned from the Board in May 2017 and Mrs Slava Chella was appointed Acting Board

Chairman immediately.

6.3. BOARD COMMITTEES AND COMPOSITION 2017 Board Committees play a crucial role in supporting

the Board to discharge its mandate. The following Committees were established and delegated specificroles. All the Committees are chaired by the non-executive directors.

Audit and Risk Committee The Audit and Risk Committee assists the Board in

discharging its duties relating to the safeguarding of assets, the operation of adequate systems, internal

controls, control processes and the preparation of accurate financial reporting and statements incompliance with all applicable accounting standards,

legal requirements and corporate governance. The Committee ensures that there are adequate and appropriate risk management systems on financialreportingrisks,internalfinancialcontrols,fraudrisks,andIT risks. The Committee composition in 2016 comprised of the following:

Mr Miracle Muusha (Non-Executive Committee Chairman) Colonel Esau J. Chiadzwa (Non-Executive Member)

Finance Committee TheCommitteeprovidesfinancialadviceandinformation

totheBoardtoenableittoeffectivelyexecutefinancial



28

decisions. The Committee oversees development, approval, review and monitoring of budgets, financial plans, policies,procedures and business performance. The Committee in 2016 comprised of the following:

Mrs Slava G. Chella (Non-Executive Committee Chairperson) Mr Alexander Mukwekwezeke (Non-Executive Member)

Human Resources and Remuneration Committee TheroleoftheCommitteeistoassisttheBoardinfulfillingitscorporategovernanceresponsibilitiesinregardtoremuneration,

strategic human resources matters and corporate social responsibility issues. The Committee in 2016 comprised of the following:

Colonel Esau J. Chiadzwa (Non-Executive Committee Chairman) Mrs Slava G. Chella (Non-Executive Member) Chief Executive Officer (Executive Member) Chief Human Resources Officer (Executive Member)

Technical Committee The Committee serves to provide consideration of the technical elements of the business operations on exploration,

production(mining), processing (recovery) and engineering including, safety, health, environmental and security issues and reviews operational risks threats on the business. The Committee is also responsible for evaluation of new technologies and processesthatmaybenefittheoperationsofthebusiness.TheCommitteein2016comprisedofthefollowing:

Mr Alexander Mukwekwezeke (Non-Executive Committee Chairman) Mr Miracle Muusha (Non-Executive Member)

Strategy and Investment Committee TheCommitteeoversees thedefining,monitoring, reviewandevaluationof thecompanystrategicand investmentsplans

including having an oversight on capital deployment, equity or debt offerings aimed at the development of the company taking into cognisance the risks associated with the activities and transactions. The Committee in 2016 comprised of the following:

Professor Francis P. Gudyanga (Non-Executive Chairman) Mrs Slava G. Chella (Non-Executive Member) Colonel Esau J. Chiadzwa (Non-Executive Member) Mr Alexander Mukwekwezeke (Non-Executive Member) Mr Miracle Muusha (Non-ExecutiveMember);

Board Meetings Attendance Due to its infancy and need to deliberate and decide on critical activities and issues impacting on the operations of the

company, the Board met several times as evidenced by the number of meetings held in the year. Four of the meetings held were interviews to recruit some executive managers of the organisation.

Name Board Audit & Risk Finance Human Resources & Technical Joint Remuneration Committees***

F. P. Gudyanga* 8 S. G. Chella 19 2 4 2 E. J. Chiadzwa** 18 1 4 2 A.Mukwekwezeke 19 2 3 2 M.Muusha** 17 1 3 2

*Resigned **Leave of absence granted***Joint Audit & Risk and Finance Committees



29

ZCDC Operational Excellence Awards

President Emmerson Mnangagwa hands over a price to ZCDC senior managers for scooping the Best Mining Company Exhibiting the most Sustainable Mining Practices and Best Corporate Social Investment Award 2018 at the Harare Agricultural Show.

ZCDC CEO Dr. Moris Bekezela Mpofu receives an award from Vice President Rtd General Dr Constantino Chiwengwa after lifting the 2017 First Runner-Up Business Leadership Award.

The winning Team…ZCDC staff pose for a photo after winning the Best Mining Company Exhibiting the most Sustainable Mining Practices and Best Corporate Social Investment Award 2018 at the Harare Agricultural Show.



30

ZCDC Operational Excellence Awards



31

ZIMBABWE CONSOLIDATED DIAMOND COMPANY (PRIVATE) LIMITED

FINANCIAL STATEMENTS 31 December 2017



32

ZIMBABWE CONSOLIDATED DIAMOND COMPANY (PRIVATE) LIMITED

NATURE OF BUSINESS:

Production and selling of diamonds.

DIRECTORS:

Mr.K.Ukama (BoardChairman)Mr. A. Mukwekwezeke (Non-Executive Director)Col. E. Chiadzwa (Non-Executive Director)Mrs. E. Muchemwa (Non-Executive Director)Mrs. E.N. Nerwande Chibanda (Non-Executive Director)Amb. Z. Nsimbi (Non-Executive Director)Ret. Col. N. Mtombeni (Non-Executive Director)

CHIEF EXECUTIVE OFFICER:

Dr. M. B. Mpofu

SECRETARY:

Mrs. S. Ndebele

REGISTERED OFFICE:

35-37 Cosham Road BorrowdaleHARARE

INDEPENDENT AUDITORS:

AMG Global Chartered Accountants (Zimbabwe)3 Elcombe AvenueBelgravia HARARE



33

CONTENTS PAGEDirectors’responsibilityandapprovaloffinancialstatements 34

Independent auditor’s report 35- 38

Statementofprofitorlossandothercomprehensiveincome 39

Statementoffinancialposition 40

Statement of changes in equity 41

Statement of cash flows 42

Statement of accounting policies 43-51

Notestothefinancialstatements 52-62



34

ItistheDirectors’responsibilitytoensurethatthefinancialstatements fairly present the state of affairs of the Company The external auditors are responsible for independently reviewingandreportingonthefinancialstatements.

The Directors have assessed the ability of the Company to continue operating as a going concern and believe that the preparationofthesefinancialstatementsonagoingconcernbasis is still appropriate. However, the Directors believe that under the current economic environment a continuous assessment of the ability of the Company to continue to operate as a going concern will need to be performed to determine the continued appropriateness of the going concern assumption that has been applied in the preparation ofthesefinancialstatements.

The financial statements set out in this report have beenprepared by management in accordance with generally accepted accounting practice. They are based on appropriate accounting policies which are supported by reasonable prudent judgements and estimates.

The Company’s internal and accounting control systems are designed to provide reasonable assurance as to the integrity and reliabilityof thefinancial statementsand toadequatelysafeguard, verify and maintain accountability of its assets. Such controls are based on established written policies and procedures and all employees are required to maintain the

highest ethical standards in ensuring that the Company’s business practices are conducted in a manner which in all reasonable circumstances is above reproach. Issues that come to the attention of the Directors have been addressed andtheDirectorsconfirmthatthesystemofinternalcontroland accounting control is operating in a satisfactory manner.

These financial statements were prepared under thesupervision of Mr Charles Gambe, Chief Finance Officer,[Bachelor of Accountancy Degree Honours (University of Zimbabwe)].

The financial statements for the year ended 31 December2017 which are set out on pages 39 to 62 were, in accordance with their responsibilities, approved by the Board of Directors on 21 September 2018 and are signed on its behalf by:

_________________________Director

_________________________Director21 September 2018

ZIMBABWE CONSOLIDATED DIAMOND COMPANY (PRIVATE) LIMITED Directors’responsibilityandapprovaloffinancialstatementsFor the year ended 31 December 2017 to all members of

Zimbabwe Consolidated Diamond Company (Private) Limited



35

Qualified Opinion

WehaveauditedthefinancialstatementsoftheZimbabweConsolidatedDiamondCompany(Private)Limited(“theCompany”),setout on pages 6 to 35, which comprise:

* Statementoffinancialpositionasat31December2017;* Statementofprofitorlossandothercomprehensiveincome,thestatementofchangesinequityandthestatementof

cashflowsfortheyearended31December2017;* Notesonthefinancialstatements;and* AsummaryofsignificantaccountingpoliciesappliedbytheCompanyduringtheyear.

Inouropinion,exceptforthepossibleeffectsofthemattersdescribedintheBasisforQualifiedOpinionsectionofourreport,thefinancial statementsareproperlydrawnup in conformitywith InternationalFinancialReportingStandards (“IFRSs”) and, in allmaterialrespects,giveatrueandfairviewofthefinancialpositionoftheCompanyasat31December2017,andresultsof itsfinancialperformanceanditscashflows,fortheyearthenended.

Basis for Qualified Opinion

We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company within the meaning of independence in accordance with the Institute of Chartered Accountants of Zimbabwe (“ICAZ”) Code of Professional Conduct, which is consistent with the International Ethics Standards Board for Accountants’CodeofEthicsforProfessionalAccountants(“IESBACode”),andhavefulfilledourotherresponsibilitiesunderthoseethical requirements.

We were not able to verify the valuation (recoverability) of amounts owed by related parties with a balance of $20 703 553 on the Company’s statement of financial position. Some of the amounts are owed by Companies that have since closed down.Management have failed to provide us with persuasive audit evidence on how and when these amounts would be recovered.

Consequently, we were unable to determine whether any adjustments to the above stated amounts were necessary.

Key audit matters (“KAM”)

Keyauditmattersarethosemattersthat,inourprofessionaljudgment,wereofmostsignificanceinourauditoftheCompany’sfinancialstatements.ThesematterswereaddressedinthecontextofourauditoftheCompany’sfinancialstatementsasawhole,and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF ZIMBABWE CONSOLIDATED DIAMOND COMPANY (PRIVATE) LIMITED

Office address:3 Elcombe AvenueBelgraviaHarareZimbabwe

Mail address;P O Box 3230HarareZimbabwe

Telephone: 263-04-251415-8Fax:+263- 04- 252420Cell: +263 772 147 993-4Email: [email protected]: www.amgglobal.co.zw



36

The key audit matters noted during the audit are as follows:

Key audit matter How our audit addressed the key audit matter

Existence and valuation of inventories

Inventories were considered to be a key audit matter because:

* The Company’s inventories comprise mostly of consumables, work in progress (ore and rough diamonds)andfinishedgoods.Inaddition,theinventories are stored at various locations.

*InventoriesareasignificantcomponentoftheCompany’soperations;and

* The inherent fraud risk associated with small high value items (diamonds).

Our audit approach was focused on verifying the existence, condition and the valuation of inventories. In addressing these assertions we performed the following procedures, amongst others:* We attended and observed the Company’s year-end stock

counts. We also conducted our own test counts and inspected thephysicalconditionoftheinventories;

* We considered the control environment over the procurement,custody,costingandvaluationofinventories;

*Were-performedthecostingofinventoriesonatestbasis;* We performed cut off tests for inventories’ receipts and

dispatches;* We assessed the procedures for identifying and writing off

and/or providing for damaged and obsolete stocks and the adequacy of stock provisions and stock write offs done during theyear;

* We performed analytical reviews of year end inventories based onproduction,purchases,costofsalesforreasonability;

*Weverifiedtheaccuracyofinventories’valuationreportspreparedbymanagementasat31December2017;and

*Weverifiedthedisclosuresrelatingtoinventoriespresentedinnote 11.

Weweresatisfiedwiththeresultsofourauditprocedures.

Valuation, existence and rights to property, plant and equipment (“PPE”)

We considered PPE to be a key audit matter because for the following reasons:*TheCompany’sPPErepresentasignificantportion

oftheCompany’sstatementoffinancialposition,astheymakeup33%oftotalassets;and

*TheCompanyhassignificantplantandequipmentwhich are prone to impairment as the Company’s operations are capital intensive.

Our audit procedures included the following procedures, amongst others:

*Wevouchedadditionstosupportingdocumentsonatestbasis;* We reviewed and considered the appropriateness of the

Company’s accounting policies with regards to depreciation ratesandresidualvalues;

* We recalculated the depreciation charge for the year on a test basis;

* Wephysicallyverifiedtheassets.Weselectedoursamplesfromthefloortotheassetregisterandviceversa;and

* We critically examined and challenged management’s impairment assessment as at 31 December 2017.

Weweresatisfiedwiththeresultsofourauditprocedures.



37

Key audit matter How our audit addressed the key audit matter

Valuation and completeness of mine rehabilitation provision

Mine rehabilitation provision was considered to be a KAMbecause:* There is an obligation on the Company imposed

by local legislation to restore/rehabilitate the environmental damage caused by mining activities upon the closure of the mine. The determination of this provision involves significant estimationand judgment, including the determination of the following assumptions amongst others:- Rehabilitationactivities;- Inflationrates;- Discountrates;and- Life of mine projections.

* The degree of estimation involved creates room for possibleerrorsand/orfinancialstatementfraud.

We obtained the mine rehabilitation provision report that was prepared by an expert appointed by the Company. We reviewed the reasonability of the assumptions and computations made based on our knowledge of the business, audit procedures performed in other sections as well as supporting documentation provided.

Weweresatisfiedwiththeresultsofouraudit.

Going concern

TheCompany’sfinancialstatementshavebeenpreparedusingthegoingconcernbasisofaccounting.Theuseofthisbasisofaccounting is appropriate unless the Directors either intends to liquidate the Company or to cease operations, or has no realistic alternativebuttodoso.Aspartofourauditofthefinancialstatements,wehaveconcludedthattheDirectors’useofthegoingconcernbasisofaccountinginthepreparationoftheCompany’sfinancialstatementsisappropriate.

TheDirectorshavenotidentifiedamaterialuncertaintythatmaycastsignificantdoubtontheCompany’sabilitytocontinueasagoingconcern,andaccordinglynoneisdisclosedinthefinancialstatements.

Basedonourauditofthefinancialstatements,wealsohavenotidentifiedsuchamaterialuncertainty.However,neithertheDirectorsnor the auditor can guarantee the Company’s ability to continue as a going concern.

Directors’ responsibility for the financial statements

TheDirectorsareresponsiblefor thepreparationandfairpresentationof thesefinancialstatements inaccordancewith IFRSs,andforsuchinternalcontrolastheDirectorsdetermineisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.TheDirectorsareresponsibleforoverseeingtheCompany’sfinancialreporting process.

Auditor’s responsibilities for the audit of the financial statements

Theobjectivesofourauditaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrommaterial misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably beexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.



38

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the planning and performance of the audit. We also:

*Identifyandassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror,designandperformauditproceduresresponsivetothoserisks,andobtainauditevidencethatissufficientandappropriatetoprovideabasis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions,misrepresentations,ortheoverrideofinternalcontrol;

* Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol;

* Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosuresmadebytheDirectors;and

*Evaluatetheoverallpresentation,structureandcontentofthefinancialstatements,includingthedisclosures,andwhetherthefinancialstatementsrepresenttheunderlyingtransactionsandeventsinamannerthatachievesfairpresentation.

We are required to communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significantauditfindings,includinganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit. We are also required to provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Report on other legal and regulatory requirements

Inouropinion,thefinancialstatementshavebeenproperlydrawnupsoastocomply,inallmaterialrespects,withthefinancialdisclosure and presentation requirements of the Companies Act (Chapter 24:03) and section 82(3) of the Public Finance Management Act (Chapter 22:19).

AMG GlobalHarare

ClytonKazembeEngagement Partner Registered Public Auditor - PAAB Number 0372

21 September 2018



39

2017 2016 Note $ $

Gross revenue 5 558 414 42 146 675Direct selling costs 2 (1 066 363) (8 157 407) ______________ _____________Net revenue 4 492 051 33 989 268Cost of sales (4 219 394) (29 608 798) ______________ _____________Grossprofit 272657 4380470Other income 3 17 807 204 768Administration expenses (14 667 420) (10 649 636)Selling and distribution (10 500) (100 000)Other operating expenses (967 685) (69 929) ______________ _____________Operating loss 4 (15 355 141) (6 234 327)Netfinancingcosts 5 (10502872)(1541932) ______________ _____________Loss before tax (25 858 013) (7 776 259)Taxation 6 6 300 335 330 653 ______________ _____________Loss for the year (19 557 678) (7 445 606) ______________ _____________Other comprehensive income for the year net of tax - - ______________ _____________Total comprehensive loss for the year (19 557 678) (7 445 606)

ZIMBABWE CONSOLIDATED DIAMOND COMPANY (PRIVATE) LIMITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEyear ended 31 December 2017



40

2017 2016 Note $ $ASSETSNon-current assetsProperty, plant and equipment 7 72 393 313 10 998 343Intangible assets 8 3 245 3 615Exploration and evaluation assets 9 1 027 457 272 544Deferred tax 16 6 630 988 330 653Investment in DTZ 10 16 695 856 - _____________ ____________ ` 96 750 859 11 605 155 _____________ ____________Current assetsInventories 11 40 974 236 2 315 832Trade and other receivables 12 14 207 517 3 158 478Amounts owed by related parties 13.1 20 703 553 20 307 027Tax refundable 196 583 196 583 Cash and cash equivalents 14 45 757 255 357 626 _____________ _____________ 121 839 144 26 335 546 _____________ _____________ ______________ ______________Total assets 218 590 003 37 940 701 ______________ ______________EQUITY AND LIABILITIES

Capital and reservesShare capital 15 30 30Shareholder’s contribution 80 000 000 -Accumulated losses (27 003 284) (7 445 606) _____________ _____________ 52 996 746 (7 445 576) _____________ ______________Non current liabilities Mine rehabilitation provision 17 12 147 742 11 068 975Long term loans 18 75 635 918 - ____________ _____________ 87 783 660 11 068 975

Date post:	22-Oct-2020
Category:	Documents
Upload:	others
View:	7 times
Download:	1 times

ZIMBABWE CONSOLIDATED DIAMOND COMPANY€¦ · Belgravia Harare 1.1. COMPANY BACKGROUND Zimbabwe...

Documents