Struggling Falgold fails to publish FY results

LISTED miner Falcon Gold Zimbabwe has failed to publish its financial results for the financial year to September 30 this year, citing operational challenges which have been worsened by inadequate foreign currency allocations by the Reserve Bank of Zimbabwe (RBZ).

BY FIDELITY MHLANGA

The company said the publication of results will now be expected after the end of 2018.

In a recent cautionary statement, the struggling firm said it was failing to pay creditors and was being cut off supply of critical operating inputs, thereby impacting normal operations.

“The directors of Falcon Gold Zimbabwe Limited (the “Company”) wish to advise all shareholders of the following pertinent matters, The Number 2 mill at the Golden Quarry processing plant (Shurugwi) had a catastrophic engineering failure late last week,” reads the statement.

“In the intervening period, management has been undertaking a full impact assessment and is now evaluating various options to deal with the matter at hand.
Notwithstanding this mill failure, to date the funding required to execute the 2019 financial budget has not been received by the company and discussions with regards this funding are ongoing”.

The Bulawayo-based mine owns Venice Mine in Kadoma; and Golden Quarry Mine located in Shurugwi.

Falgold is 84,7% owned by Canadian-listed New Dawn Mining Corporation.

For the six months ended March 31 2018, Falcon Gold Zimbabwe Limited reported revenue of $ 2,5 million down from $3,6 million recorded over the same period last year.
Loss from continuing operations before taxation was $ 1,6 million compared to $2,5 million in the prior year.

In 2016, Falgold disposed its Dalny Mine to one of the country’s top producers RioZim for $8million.

RioZim has also been facing similar challenges of inadequate foreign currency to meet its operational requirements.

In October, RioZim stopped operations at three of its units (Renco Mine, Dalny Mine and Cam and Motor Mine) after running out of consumables such as explosives, caustic soda, cyanide, activated carbon, forged steel balls and spare parts.

The central bank has since reviewed the forex retention threshold of gold miners to 55% of export earnings from the previous 30% after the Chamber of Mines Zimbabwe, which represents large-scale miners warned of imminent closures and job losses in the extractive sector.

But as the dollar note shortage persists, some miners have only received part of their allocation from the central bank, while others have not received anything at all.
Outstanding foreign payments for gold producers are in excess of $15 million.

This year, the country is targeting output of 35 tonnes of gold, but hopes of achieving that target have been dented, because of the slump in production.

Mining contributes more than 60% of the country’s foreign earnings and the sector is expected to anchor revival of the southern African economy.

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