ZIMBABWE Stock Exchange-listed mining concern, Falcon Gold (Falgold) has reported a $12,5 million loss for the full year to September compared to a profit of $4 million posted during the same period last year due to a decline in revenue and rising operating costs.
By Acting Business Editor
The company’s revenue declined to $26,6 million during the period under review from $34 million the previous year while mineral production expenses rose to $29 million from $27 million.
Administrative costs also advanced during the period under review. The decrease in revenue and rising operating costs, the company said, also resulted from operating and labour issues at Dalny Mine reported early this year . The operating loss for the year ended September 30 was $6,2 million compared to an operating profit of $3,9 million reported during the same period last year.
“The significant deterioration in the company’s financial performance was caused in substantial part by a decrease in revenues from gold sales resulting from the falling gold price,” the company said in a statement accompanying the financials.
“Gold sales for the year ended September 30 were 556 kilogrammes, compared to a total of 650 for the year ended September 30 2012. The average gold price was $1 502 per ounce for the year ended September 2013, as compared to $1 656 per ounce for the year ended September 30 2012. The gold price has continued to fall and is currently fluctuating in a range between $1 225 and $1 350 per ounce.”
The company said administration costs increased on an absolute basis due to the National Employment Council-mandated salary and wage increases.
The company said fluctuating mineral prices on the international market have resulted in wage cuts to improve viability.
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“In direct response to low gold prices, the company has agreed with various works councils to reduce all salary and wage levels by 25%, initially for a three-month period beginning in mid July 2013, pending the improvement in the financial condition of the company.
These agreed reductions to the salary and wage levels have now extended to mid 2014, at which time they will be reviewed,” the company said.
The mining sector, now the anchor of the economy was initially projected to grow by 17,1% in 2013, which has, however, been revised downwards to 6,5%, mainly on account of low exploration, lack of capital and weakening commodity prices on the international markets.
Presenting the 2014 National Budget last Thursday, Finance minister Patrick Chinamasa said next year the mining sector is projected to grow by 11,4%, on the back of planned investments and largely driven by strong performance in gold, diamonds, nickel and coal.
Official figures show that total gold output for the first eleven months of 2013 amounted to 12 914,51kg, compared to 13 650,9166kg produced during the comparative period in 2012, representing a 5,4% decline.
The under-performance was attributed to the accident at Freda Rebecca, escalating operational costs, unreliable power supply, and falling international gold prices, reaching a low of $1 198 per ounce in June 2013.
“Owing to the above, the 2013 total gold output target has been revised downwards from 15 000kg, to 14 000kg. In 2014, however, gold production is projected to increase by 7,1% from 14 000kg in 2013, to 15 000kg,” Chinamasa said.
