New Dawn mulls selling mines

HARARE - Toronto Stock Exchange-listed New Dawn Mining Corporation (New Dawn) is considering disposing of two of its five mines in Zimbabwe as part of efforts to raise additional capital.

This comes as the Zimbabwe-focused gold miner’s operations have been hit by falling international gold prices, increased mining royalties and pressure to cede 51 percent shareholding to black locals in compliance with the southern African country’s indigenisation policy.

The group said it has “initiated a programme to sell some of its mining assets that are not considered integral to its long-term strategy.”

It said it will also continue pursuing efforts to raise additional capital through debt and or equity issuances.

“As part of this divestiture process, the company is engaging with several potential parties in an attempt to sell the Old Nic Mine and the Venice Mine,” said New Dawn.

New Dawn owns 100 percent of the Turk and Angelus Mine, the Old Nic Mine and the Camperdown Mine.

In addition, the group owns approximately 85 percent of the Dalny Mine, the Golden Quarry Mine and the Venice Mine (currently not in operation), and a portfolio of prospective exploration acreage in Zimbabwe.

With the exception of Venice, all of these mines are currently operational, and are geographically-divided into three major gold camps.

New Dawn noted that due to current limitations on the availability of investment capital and the recent price of gold, the company was continuing its near-term operating strategy of focusing on improving operating efficiencies and processes in a steady-state/low-growth production model based on currently installed plant and infrastructure.

“We expect this phase to continue until market conditions improve and the company is able to access debt and/or equity capital in sufficient amounts to fund the expansion and development of its mining operations and exploration programmes, which, in turn, are primarily conditioned on finalisation and implementation of the Company’s Plan of Indigenisation, as well as any impact from unforeseen and/or deleterious changes to the business environment in Zimbabwe”, said New Dawn.

The company said its efforts to address and improve operating viability at its mine sites in Zimbabwe are subject to various factors outside its control.

“For example, taxes and royalties, mining fees, labour rates, power costs, environmental regulations, the economic and business environment in Zimbabwe, and potential changes to the legislative and regulatory environment in Zimbabwe, any of which could impact the company’s mining operations, capital requirements and ability to operate in a commercially-viable manner or at all.”

Most mining companies operating both in Zimbabwe and in other countries were forced to review their plans due to falling metal and gold prices.

New Dawn — which is currently under serious pressure to bring operating costs in line with the current gold price regime — hinted that if the economic environment in Zimbabwe does not improve there is a significant risk that actions more severe than steps taken so far or currently envisaged may be required.

“If the world price of gold continues to decline further and/or the company’s operational liquidity is further strained, the company may be forced to consider shutting down some or all of its mining operations in Zimbabwe, either temporarily or permanently, and/or the liquidation of the company and its assets in formal or informal arrangement,” said New Dawn.

Comments (5)

Vana Kasukuwere tengai kamaMines aya. mongoda kupamba zvemahara chete handiti?

Gorongoza - 20 August 2013

Vana Kasukuwere tengai kamaMines aya. mongoda kupamba zvemahara chete handiti?

Gorongoza - 20 August 2013

SK, get ready with cheque bk plse, another one for indegenisation! Hooray, dzauya dzega! Seka hako muZimbo!

Jambanja paSalisbury - 21 August 2013

They are very clever, they thought the MDC was going to win the elections and reverse out the Indigenisation policies thereby encouraging them to invest more capital and remit the super-profits to Canada and USA which are enemies of Zimbabwe, hahahahaha, tough, Zanu PF won and this is their way of expressing their disatisfaction. Mr Kasukuwere, dont be fooled by these fools. They only want to scare you away from taking over these mines by giving a picture that the mines are not profitable!!

Simba - 22 August 2013

they are never fooled believe me. this country will be left an empty basket

me - 11 January 2014

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