Falgold shareholders approve Dalny Mine disposal, expect to break even

Falgold shareholders approve Dalny Mine disposal, expect to break even

BULAWAYO, March 23 (The Source) – Resources group Falcon Gold says it expects to break even or possibly make profit this year following the sale of Dalny Mine to RioZim.

Falgold and RioZim last year entered into an agreement in which the latter would acquire Dalny mine shares and loan accounts for $8 million.

Shareholders of Falcon Gold on Wednesday approved the transaction, which now awaits for approval from the Competition Tariffs  Commission.

“The group remains in distress, but it is management’s view that fiscal 2017 the efforts being pursued have the potential for the group to realize an improved operating performance and subsequent financial position, with the possibility of arriving at more than a cash neutral position by the end of the fiscal year,” chairman Ian Saunders told shareholders.

“These efforts will include serious attention to controlling costs and a containing focus on increasing production and, subject to the trends in the price of gold, revenues,” he added.

He, however, said the high cost base, coupled with the falling gold price, remains a real and persistent threat to the continued operations of the Golden Quarry mine in Shurugwi.

“Measures in the form of key growth projects are being put in place to increase the ore production and treatment capacities at the mine in fiscal 2017, which should raise production volumes and generate increased revenues,” he said.

“Since these projects are being funded from limited cash generated by the mine, they may not be commissioned within the desired time frames. The proceeds of the Dalny Mine sale accelerated these projects and fund other new projects that will further enhance the performance of the group”.

Notwithstanding the fact that the group had previously stopped all exploration and new project developments in 2016, Saunders said efforts were now in place to carry out some limited exploration activities and to implement previously planned and mooted projects for commissioning during the current fiscal year.

“The pace at which this can be done will be accelerated by the proceeds from the sale of Dalny Mine,” he said.

The group reported a loss of $1,3 million for the year ended September 30, 2016 from a profit of $6 million in the previous year due to low production.