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Falcon Gold records $27m loss

MINING giant Falcon Gold’s woes continue to mount after its total comprehensive loss for the six months to March 31, 2019 skyrocketed by 1 519% to $27 million.


MINING giant Falcon Gold’s woes continue to mount after its total comprehensive loss for the six months to March 31, 2019 skyrocketed by 1 519% to $27 million.

According to its unaudited interim consolidated results of operations for the six months ended March 31, 2019, Falgold’s losses amounted to $27 million against $1,7 million reported in the same period last year.

It recorded a net working capital deficit of $11 million, up 68% in the comparable period and negative equity of $44 million.

“The group continues to incur losses. The increase in total comprehensive loss is mainly due to foreign exchange losses amounting to $23 917 228,” the group’s chairperson, Ian Saunders said.

The group produced 1 849 ounces of gold in the period under review, with an average sale price of US$1 350 per ounce on the sale of 1 961 ounces of gold, compared to 1 920 ounces of gold recorded in the same period last year at an average sale price of US$1 321 per ounce.

Gold production decreased by 71 ounces or 3,7% in 2019, compared to 2018.

Mineral production expenses increased to $5 million.

“The board and management, with the assistance of the majority shareholder, are exploring options for additional US$2,5 million to US$3m of funding to enable repair of the mill and resuscitation of mining operations, but have not finalised the funding structure,” he said.

In its statement to shareholders accompanying the September 30, 2018 year-ended financial statements, the group reported that there was a catastrophic engineering failure of the main operating mill at Golden Quarry Mine, which had adversely affected production and cash flows.

Saunders said termination of power supplies by the Zimbabwe Electricity Transmission and Distribution Company further compounded the problems.

“As a result of this and other cash flow challenges, the Golden Quarry Mine has not been operational. Management has undertaken a full impact assessment and is evaluating various options to deal with the situation including either repair, refurbish or outright replacement of the mill,” he said.

“Notwithstanding the mill failure, to date the funding required to execute the 2019 budget has not been provided and discussion with the company’s majority shareholder are ongoing.”

In the outlook, Saunders said there have been some positive developments in the operational macro environment for the mining industry compared to previous years, although the tax regime remains unfavourable.

He said the gold price has remained favourable and was predicted to continue the upward trend in the foreseeable future.

“The power supply situation remains unstable, although it is believed that there could be some improvements going forward with the mining industry set to be on dedicated power supply,” he said.