(NEWZIMBABWE) Miner Cuts Wages AS Gold Price Dips
19/07/2013 00:00:00
by Business Reporter
GOLD miner New Dawn Mining has warned that it might have to shut or sell its operations in the country if the gold price continued to slide and its cost-reduction measures failed.
New Dawn, which operates five mines in the country employing about 3000 people, is implementing measures to drive down costs following a strategic review of its operations in an April review.
Lower gold prices, combined with the uncertainty surrounding the implementation of the indigenisation programme and current limitations on the availability of investment capital, have placed "undue" pressure on New Dawn's mining operations.
Gold slid to a low of $1 192/oz on June 28 - a level not seen since mid-2010 - and despite a recent rebound taking the metal to a range of $1 200/oz to $1 300/oz in July, prices are still well below the high of $1 889/oz in 2011.
“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,” the company said.
The Canada-listed junior has now frozen all capital development projects, except those needed to sustain production for six months. It also negotiated temporary price reductions with suppliers of various critical supplies, ranging from 5% to 15%.
New Dawn said it had successfully negotiated an initial 25% wage reduction pertaining to all the occupation levels of its 3 000 employees.
The company added that it would eliminate, or reduce, certain administrative positions in Canada and Zimbabwe, and that it had already reduced, or deferred, certain costs at its corporate offices in Toronto, including management compensation and board fees.
Further, New Dawn said it would focus on operating efficiencies, including adjusting the cut-off grades that were being mined, which could help improve the recovered grades and resulting gold output.
“If (these) 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,” management said in a statement.
“The company’s efforts to address and improve operating viability at its mine sites are subject to various factors outside of its control, including, for example, taxes and royalties, mining fees, power costs, the (local) economic and business environment, and potential changes to the legislative and regulatory environment, any of which could impact operations, capital requirements and ability to operate in a commercially viable manner or at all.”
The company said it did not expect the cost-reduction measures to negatively impact on gold production in the short term, adding that it was exploring other options, including significant changes to its operating and capital structure, divestitures, joint ventures and various structured financings.
New Dawn reported a 4.7% year-on-year increase in gold production to 9,986 oz in the June quarter, of which 9,168 oz were attributable to the company. Its gold sales, on a consolidated basis, declined by 10.2% to $13.62-million, compared with $15.16-million a year earlier.
The average sales price per ounce of gold declined to $1,399 for the June quarter, from $1,608 in the March quarter.
New Dawn owns 100% of the Turk and Angelus, Old Nic and Camperdown Mines.
In addition, through its Falcon Gold Zimbabwe Limited subsidiary, the company currently owns 84.7% of the Dalny, Golden Quarry and Venice Mines, and a portfolio of prospective exploration acreage in the country.
With the exception of the Venice Mine, all the mines are currently operational.
Labels: GOLD, JOBS, NEW DAWN MINING
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New Dawn Mining, CAG merger threatens our security: Govt
By: Our reporter
Posted: Friday, June 25, 2010 6:03 pm
THE inclusive Government of Zimbabwe has expressed concern at the purported acquisition by New Dawn Mining Corporation of an 89% controlling share of Central African Gold, as the transaction has taken place offshore and without reference to the company's indigenisation and mining laws.In a statement issued by the Minister of State for Presidential Affairs, Didymus Mutasa, government expressed "grave concern" with the deal.
New Dawn is listed on the Toronto Stock Exchange (TSX) and the Frankfurt Stock Exchange, while CAG is quoted on the Alternative Investment Market (AIM), which is the London Stock Exchange's international market for smaller growing companies.
In the statement, emailed to the Zimbabwe Guardian on Thursday, Minister Mutasa said "Government is particularly concerned by the fact that it only learnt of this transaction of through the local press."
CAG's major shareholders are also non-Zimbabwean and include Emerging Capital Partners (ECP) Africa Fund, HBD Zim Investments Limited and Investec Asset Management Limited.
"It is manifestly wrong and indefensible for foreigners to play casino with Zimbabwe's assets in this way, whichever way one chooses to look at this transaction, be it political, legal, economic or social," read the statement.
Minister Mutasa said that CAG acquired its controlling share in Falcon and Olympus Mines on 1st March 2007, through a similar offshore share swap transaction. With that, it took ownership of Dalny Mine, Golden Quarry Mine, Venice Mine, Camperdown Mine, Old Nic Mine and other significant additional geologically prospective ground holdings in various parts of Zimbabwe, all attributable 100% to Falgold and Olympus.
These two mining houses, together, constitute the second largest gold mining group in Zimbabwe after Metallon Gold. This makes any transactions involving them strategic and of major national security interest.
"In 2008, CAG decided to shut down operations and place all of the above mines, except Old Nic Mine, under care and maintenance in protest at what it termed a 'hostile fiscal and policy environment'," read the statement.
"CAG leveraged the 2007 acquisitions to raise substantial finances through equity and loans, but went on to invest this money in Ghana where it claims to have lost all of it, while the Zimbabwe assets lay in disuse.
"With the benefit of hindsight, however, it is now clear to Government and all well-meaning stakeholders that CAG never intended to mine a single ounce of gold in Zimbabwe because, by the mere acquisition of these assets, it was able to continue to keep a decent balance sheet through various offshore listings."
According to the minister, this enabled CAG to keep the Zimbabwe assets under care and maintenance for prolonged periods, for speculative negative political ends and "as a result of this deliberate policy, of all the CAG mines in Zimbabwe, only Old
Nic and Dalny are currently producing, after Dalny resumed operations at bare minimum capacity 2009."
"Government cannot, therefore, continue to countenance these kinds of transactions (which do not involve) any local involvement, particularly as the Western sanctions persist."
According to Minister Mutasa, this is "a direct threat to Zimbabwe's sovereignty and national security. No country in the world allows outsiders to play such casino games with its natural resources."
"Government, therefore, will subject this deal to rigorous collaborative scrutiny by Cabinet, the Ministry of Indigenisation & Youth Empowerment, the Ministry of Mines and Mining Development, the Ministry of State Security, the Parliament of Zimbabwe, the Zimbabwe Investment Centre, the Competition and Tariffs Commission, the Securities Exchange Commission and other
relevant Government and regulatory authorities, in order to ensure its conformity with Zimbabwe's immediate national security needs.
"This notwithstanding, Government will also follow with keen interest and encourage any engagements that seek to build honest business partnerships in the interest of indigenisation, international best practice and Zimbabwe's national security."
Labels: CAG, DIDYMUS MUTASA, NEW DAWN MINING
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