RESOURCES group Falcon Gold’s ability to continue as a going concern is uncertain after its current liabilities exceeded assets by $2,4 million in the year-ended September 30, 2016, an independent auditor Ernst and Young has warned.
BY MTHANDAZO NYONI
In its report released recently at the Falgold’s annual general meeting held in Bulawayo, Ernst and Young casted doubt on the resources group’ survival.
“Without qualifying our opinion, we draw your attention to Note 24 to the consolidated financial statements which indicates that the group has recorded a net loss for the year-ended September 30, 2016 of $1 356 385 (2015: profit of $6 443 977) and as at that date its current liabilities exceed its current assets by $2 373 615 (2015: $4 230 110) and has negative equity of $11 371 805 (2015: $10 015 430),” the report read.
“These conditions, along with other matters as set forth in Note 24, indicate the existence of a material uncertainty which may cast significant doubt on the group’s ability to continue as a going concern.”
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.
Revenue was 18% down to $9 million from $11 million as gold sales decreased by 22,5% to 231kg due to power outages and equipment breakdown, the group said.
Group chairperson, Ian Saunders also conceded that Falgold was in a fix.
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“The majority of factors affecting the group’s operations are external factors outside of its control. As such, there is significant pressure on the group’s efforts to survive,” Saunders said.
“Accordingly, as stated previously, should the group be forced to consider shutting its remaining mining operations, either temporarily or permanently, and or liquidating the group and its assets in a formal or informal arrangement, then the group maybe unable to continue realising value from its assets and discharging its liabilities in the normal course of business.” He, however, placed his hope on the sale of Dalny Mine to RioZim at a cost of $8 million.
