New Dawn’s subsidiary closes Dalny Mine in Zimbabwe

2 September 2013 (Last Updated September 2nd, 2013 18:30)

Falcon Gold Zimbabwe, a subsidiary of New Dawn Mining, has closed the Dalny Mine situated in the Kadoma region of Zimbabwe.

Mining

Falcon Gold Zimbabwe, a subsidiary of New Dawn Mining, has closed the Dalny Mine situated in the Kadoma region of Zimbabwe.

The Dalny Mine produced about 1,949 ounces of gold for the quarter ended 31 March 2013 and 2,762 ounces of gold in the quarter ended 30 June 2013.

As part of its shutdown, the company has placed Dalny Mine's workforce on unpaid leave, while it is moving the mine to care and maintenance.

The significantly decreased gold price in the last nine months, along with the impact of operational problems at the mine, has resulted in a serious liquidity problem for the company.

Increasing payroll and power costs, as well as the damaging and costly illegal strike and lack of full electrical power, are the factors which are responsible for the termination of mining operations at the Dalny Mine.

"The company has placed Dalny Mine's workforce on unpaid leave, while it is moving the mine to care and maintenance."

In addition, New Dawn's Zimbabwe subsidiaries are facing negative working capital positions, and a difficult legislative, regulatory and economic environment in the country.

The uncertainty surrounding the implementation of indigenisation policy, which will seize 51% controlling interests in foreign controlled mines, is also one of the factors for shutting down operations.

The two year delay in the still incomplete approval process for the company's proposed plan of indigenisation has contributed to the Dalny Mine's current difficulties.

A timely approval of the plan is expected to add sufficient investment capital to the company, which will also fund the development of a cost efficient operation at the Dalny Mine.


Image: Gold is a preferred commodity for equity investments in 2013. Photo courtesy of Bertrand Rieger / Corbis.

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