Falcon Gold extends losses: Blames escalating costs

money loss

Prosper Ndlovu, Business Editor
FALCON Gold Zimbabwe Limited remains in the red despite narrowing its loss for the year ended September 31, 2017 to $751 000 compared to $1.4 million in the prior year, buoyed by proceeds from the sale of its subsidiary Dalny Mine to RioZim Limited for $4.1 million.

Mr Ian Saunders, for the board, revealed in an audited financial statement for the period issued Friday that the group remains on negative territory with net operating loss widening to $5.2 million compared to $2.7 million in 2016.

The group is essentially insolvent with total liabilities at $8.4 million clouding a heavily depleted total asset base valued at $7.6 million compared to $12.5 million in 2016.

According to the report, gold sales in 2016 and 2017 were realised from the group’s sole operating gold processing plant at Golden Quarry near Shurugwi.

The 2017 sales dropped by 72kgs or 31.2 percent compared to 231kgs in 2016, mainly due to inadequate suitable ore deliveries to the plant and, to some extent equipment failures.

The board attributed the negative trend to generally depressed production during the period, which was compounded by an increase in costs in the later part of the year.

“There have been no positive changes to the operational macro-environment. The tax regime remains unfavourable and the power tariff prohibitively high.

“The resultant high operating cost base remains a threat to the continued viable operation of the mines,” said Mr Saunders.

He, however, hoped improved gold prices and commissioned growth and improvement projects being undertaken by the group would reverse stagnation and increase output and treatment capacities of the mines in 2018.

The group pins its hopes on the investment made using Dalny Mine proceeds, which were channelled towards completing various projects meant to increase throughput.

These include commissioning of upgraded crushing facilities in December 2016, replacement of antiquated equipment in milling plants,                   commissioning of the long-awaited 7-level loading station at Golden Quarry and increased hoisting capacity.

“As a result the group anticipates an increase in production volumes and an improvement in revenues, with the objective being for the group to reach and sustain economic viability,” said Mr Saunders.

He however said ongoing liquidity challenges facing the economy among other external factors, were exerting pressure on the group, with a possibility of totally squeezing the business out without ruling out liquidation.

Mr Saunders hoped that doing business reform processes would yield investor confidence and open doors for fresh debt capital at reasonable cost that will allow the mining concern to regain footing.

 

Article Source: The Chronicle