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Business Reporter
CANADIAN headquartered New Dawn Mining Corporation has slashed salaries by a quarter and suspended long term capital projects as part of a raft of measures to cut costs in response to falling global gold prices. New Dawn said its mines in the country which failed to break even under the new cost cutting measures would be placed under care and maintenance for eventual disposal.
In a statement, the company said it had taken the measures due to falling global gold prices which have been averaging between $1 200 to $1 300 an ounce in the first half of the year from a peak of more than $1 700 last October.
“The decline in the gold price since October 2012 has had a significant and increasingly negative impact on the company’s mining operations, profitability and operating cash flows,” said New Dawn.
It said an agreement had been reached at Works’ Council level to reduce salary of both workers and management at all levels by 25 percent over the next three months with effect from 1 July.
Certain administrative posts in Zimbabwe and Canada would be eliminated or reduced while at the company’s corporate offices in Toronto, Canada, management compensation and board fees would be reduced or deferred.
The company employs 3 000 people at its mines in the country which include Turk and Angelus, Old Nic and Camperdown Mines.
It also owns 84,7 percent of the Dalny, Golden Quarry and Venice Mines, and a portfolio of prospective exploration acreage.
New Dawn said only capital development projects set for commissioning in the next six months would be implemented.
The company will also seek temporary price reductions ranging from 5 percent to 15 percent from its suppliers for various critical supplies.
“As the company continues implementation of the initiatives identified by its strategic review, the company expects to improve production and significantly reduce mine operating costs.
“However, if a mine is unable to attain and maintain operations at a cash break-even level in the short-term under the current operating and business environment, the company has determined to place it on care and maintenance.”
New Dawn said it expected the measures, which are not expected to affect production, to be successful.
“If the . . . measures are not sufficient to enable the company to operate its mines in a commercially viable manner and generate sufficient operating liquidity, or if the world price of gold continues to decline further, the company may be forced to consider shutting down its operations, either temporarily or permanently, and/or liquidating its assets in a formal or informal arrangement,” said New Dawn.
Last week, the company in its quarterly review announced that gold sales had dropped by 9,1 percent because of the falling prices on the world market.
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