FALCON Gold Mine has sold off its majority shareholding in Venice Mine near Kadoma to an unnamed investor who will inject $4 million to kick start production following closure in 2002, New Dawn president and chief executive Ian Saunders said yesterday.
BY MTHANDAZO NYONI
“The group entered into a progressive investment agreement with an investor with respect to the Venice Mine,” Saunders said in a statement accompanying the group’s interim results.
“This agreement laid out a process wherein the investor agreed to invest equity finance of at least $4 million over a period of time, and with additional investment, bring Venice Mine back into production.
“During June 2015, the group entered into an amended progressive investment agreement whereby almost full ownership and control of the Venice Mine was acquired by the investor.”
He said the initial investment was made in December 2014, resulting in the group’s loss of control of Venice Mine as at January 1 2015 (from 100% to 37,5%).
The group reported a net loss of $1,66 million for the half-year to March 31, compared to a $1,65 million loss in the prior year, on the back of depressed gold prices and costs for maintaining closed Dalny Mine.
Dalny Mine, which was shut down in August 2013, incurred care and maintenance costs of $699 948 (included in the loss reported). The group produced 4 527 ounces of gold as compared to 4 789 ounces for the same period last year.
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The operating loss at $1,5 million was higher than the $1,4 million registered last year. Saunders said in the period under review, some progress was made on various incremental improvement projects with the potential to raise the output of Golden Quarry Mine by 30% or more.
When these projects are completed, Saunders said, Golden Quarry Mine is expected to return to sustainable profit levels, even at current gold price levels.
He said the group expected that some of the key projects in this upgrade programme would be in operation before the end of calendar year 2015.
In the last few months, the group entered into a plant rental agreement at Dalny Mine with a third party, Saunders said.
“This agreement, when fully operational, is designed to ensure that not only will the care and maintenance costs of Dalny Mine be paid, but that some net positive cash flow will be evident. This situation is expected to significantly impact, in a positive way, the financial performance of the group,” he added.
