Falgold seeking fresh capital
FALCON Gold Zimbabwe (Falgold) says it is still seeking fresh capital to revamp its operations.
The Zimbabwe Stock Exchange-listed miner saw its losses widening by 1 519 percent to $27 million in the half-year to March 2019.
Falgold company secretary Qubeka Nkomo this week said “the company is still contemplating a capital raise which, if successfully concluded, may have an effect on the price of the company’s shares”.
While Nkomo did not specify the amount needed to revitalise the gold producer, Falgold’s management earlier indicated that it planned to raise funds within the range of US$2,5 million and US$3 million to repair plant and machinery and in the aftermath commence operations at the Golden Quarry Mine.
“The board and management, with the assistance of the majority shareholders, are exploring options for additional US$2,5 million — US$3 million of funding to enable repair of the mill and resuscitation of mining operations but have not finalised the funding structure,” the company said.
In 2018, Falcon Gold reported a catastrophic engineering failure at Golden Quarry Mine’s main operating mill.
The failure affected “production and cash flows”.
Since then, operations had been halted, with management weighing options either to refurbish or completely replace the mill, which solutions called for adequate capital.
Owing to halted operations and power outages that compounded the problem, losses ensued in the 2019 half-year period with the miner recording an upsurge in net working capital deficit to $11,3 million from $6,7 million in September 2018.
A negative equity was recorded of $44,4 million compared to a 2018 comparative of $17,2 million.
Given the scope of work to be funded, the capital raise initiative seems to be an inevitable exercise despite the holding company, New Dawn Mining Corporation, having reportedly extended the grace period for repayment of loans to 2020.
The group produced 1 849 ounces of gold in the half year under review, with an average sale price of US$1 350 per ounce on the sale of 1 961 ounces of gold, compared to 1 920 ounces of gold recorded in the same period last year at an average sale price of US$1 321 per ounce.
Gold production decreased by 71 ounces or 3,7 percent in 2019, compared to 2018.
Mineral production expenses increased to $5 million.