Falgold leases out gold processing plant, says fallen on hard times

Falgold leases out gold processing plant, says fallen on hard times

BULAWAYO, April 13 (The Source)—Listed resources group Falcon Gold has leased out Palatial Gold’s processing plant and the area surrounding it to RioZim Limited for a period of nine monthsunder a renewable operating lease agreement.

RioZim will payFalgold a rental fee of $10 per dry metric tonne of ore milled and processed, according to the group’s annual report for 2015 released at its annual general meeting on Wednesday.

The report said the cost of repairs to the plant are borne by RioZim and each month RioZim deducts amounts it incurs on repairs from the rental up to a limit of 50 percent of rental amount payable to the group.

“The total amount which RioZim may deduct from the rental payable in respect of the repairs to the plant should not exceed $250 000. In addition, RioZim recovers in full all monies expended by them in respect of repairs to the plant in the event that Palatial Gold is sold to third parties,” notes the reports.

The report noted that the group had received a short-term loan from Vast Resources of $500,000. It reported that on December 3, 2015, an agreement was signed relating to the loan with terms that the loan was interest free. However, an interest of 10 percent per annum (compounded monthly) was payable in the event of a default.

“The loan was secured by a notarial general covering bond which shall be registered against the mining claims and generally all Patatial Gold’s movable property and assets of whatsoever kind and nature situate upon and comprising the area in Chakari known as Dalny Mine”.

The group reported that it has fallen on hard times and could close operations permanently due to the current lack of profitability and the economic viability of its mines spawned by the current gold price and cost regime.

The net operating loss for the year was $3,7 million as compared to $2,4 million last year in the same period.

Gold sales for the year decreased by 14 kilograms to 298kg as compared to 312kg for the year ended September 30, 2014 due to increased power outages in 2015. In the period under review, the average gold price realised was $1 164 per ounce as compared to $1 267 per ounce in the prior year.

Mining and processing costs were $11 million, down 4,6 percent from the prior year.