HARARE, Sept 2 (The Source) – New Dawn Mining has shut down its Dalny Mine in Kadoma and placed its entire workforce on unpaid leave citing poor gold prices, high operating costs and pending power cuts over unpaid debts.
Dalny owes $3.1million to creditors, chief among them the Zimbabwe Electricity Supply Authority, which issued a notice to disconnect power from the mine.
“A combination of adverse factors … steadily increasing payroll and power costs and high domestic royalties, taxes and fees, as well as a damaging and costly illegal strike and the lack of full electrical power, both experienced earlier in the year,” New Dawn said in a statement posted on its website.
“In the aggregate, these specific difficulties, together with lower gold prices, caused significant operating inefficiencies and high operating costs, thus resulting in the operating losses and negative cash flows at the mine over the past several months.”
The company added it had no access to sufficient investment capital to fund the mine because of the delay by over two years by government to approve its indigenisation plan.
After years of underdevelopment, had an investment program in the Dalny Mine been implemented and completed as originally anticipated, the Dalny Mine would have been positioned to maintain profitable operations in today’s environment of lower gold prices and increasing costs.
The mine was shut down on Friday and was put on care and maintenance while New Dawn looks for buyers or partners for a joint venture.
Dalny Mine produced 1,949 ounces of gold in the quarter ended March 31, 2013, and 2,762 ounces of gold in the quarter ended June 30, 2013.
New Dawn said it will engage with the creditors of the mine to come up with a payment plan.
The mine employs approximately 900 people, all of whom have been placed on indefinite unpaid leave.
New Dawn is the parent company of Falcon Gold, the owners of Dalny Mine, along with Venice Mine in Kadoma and Golden Quarry mine in Shurugwi.
“The company, at all of its mining operations, is under serious pressure to bring operating costs in line with the current gold price regime,” it said.
“In addition, its Zimbabwe subsidiaries are facing negative working capital positions and an increasingly difficult legislative, regulatory and economic environment in Zimbabwe.”