Falcon Gold revenue down 56pc

Harare Bureau
ZIMBABWE Stock Exchange listed firm Falcon Gold said revenue for six months to March this fell 56 percent following the shutdown of Dalny Mine in August last year. Sales from the bullion declined to $6,3 million from $14,4 million a year earlier, the Bulawayo-based gold miner said in a statement. Before the closure of the mine, Falgold got half of its revenue from Dalny. The company opted to close the mine at the end of August 2013 and placed it on a care and maintenance basis after Zesa Holdings disconnected power supplies over non payment.

Gold output fell to 4,789 ounces from 8,285 ounces a year ago. Average prices per ounce increased to $1,636 from $1,274. “The large drop in production in 2014 as compared to 2013 is attributable to the closure of Dalny Mine in August 2013.

With the closure of the mine, and current production at Golden Quarry at stable output level based on installed equipment and plant infrastructure, any improvements in the performance of the company will require installation of additional capacity.

Net loss for the period narrowed to $1,65 million from $2,60 million a year earlier. Mining and processing costs decreased to $6,6 million from $15,49 million.
The operating margin at -5,8 percent dropped from -7,4 percent due to the closure of Dalny Mine and cost cutting measures necessitated by the fall in gold prices.
Cost for maintaining Dalyn Mine was $774 ,475 and was included in the net loss for the period.

African Consolidated Resources has since offered $8 million to acquire Dalny Gold Mine.
The terms of the transactions include full settlement of all known trade creditors of Dalny Mine, full settlement of unpaid wages and a full settlement of any capital gains tax or other tax liabilities due to the Zimbabwe Revenue Authority. The balance of funds ($2,5 million) after these payments will then be remitted to Falgold.

About 900 workers employed at the mine were sent on unpaid leave. Operational issues encountered in the final quarter of 2012 spilled into the financial  year, resulting in loss for five months. This was followed by an illegal labour stoppage and the fall in international gold prices worsened cash flow situation at the company.

Upon the completion of the transaction, the management said it will focus on “re-organisation” of the holding company and operating structures, both to able to comply with the Indigenisation and Economic Empowerment laws and to facilitate debt into Golden Quarry Mine to finance the planned upgrade. Funding options for a larger dump retreatment project are also currently underway, the company said.