BULAWAYO-BASED mining concern Falcon Gold Zimbabwe Limited recorded a net loss of $12,5 million in the full-year ended September 30 attributed to plummeting international gold prices, among other things.
GAMMA MUDARIKIRI OWN CORRESPONDENT
The loss is a steep decline from the $4 million profit recorded in the same period the previous year.
It has been partly attributed to the closure of the company’s Dalny Mine which saw revenue dropping to $26,6 million compared to $34,6 million achieved last year.
“The significant deterioration in the company’s financial performance was caused in substantial part by a decrease in revenues from gold sales resulting from falling gold prices,” said company chief executive officer Ian Saunders.
“Operating and labour issues at Dalny Mine also contributed to decreased revenues and increased operating costs.”
Saunders said Dalny Mine operated at a loss for five months and after Zesa disconnected power supplies to the mine it had to be shut down. Gold sales in the period amounted to 556kg compared to 650kg achieved in the same period in 2012, while prices for gold dropped to $1 502 per ounce compared to $1 656 per ounce recorded last year.
Prices for the precious mineral were this year fluctuating between $1 225 and $1 350 per ounce, which resulted in decreased revenues for most gold mining companies.
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Saunders said mining processing costs aggregated to $29,1 million compared to $27,5 million last year reflecting a 15% in the National Employment Council mandated salary and wage levels increases effected at the beginning of the year and the continued high cost of power and other indirect taxes.
Administrative costs increased to $2,2 million up from $1,9 million recorded last year also attributed to increased wage and salary levels.
“Administration costs as a percentage of mining and processing costs, increased from 7,2% in 2012 to 7,5% in 2013,” said Saunders.
He said in direct response to the falling mineral prices, the company agreed with various works councils to reduce all salary levels by 25% initially for a three-month period beginning of July this year pending improvement in the company’s financial position.
The agreed reduction to salary and wage levels has been extended to mid-January next year.
The company had embarked on the initial exploration stages at two sites, but suspended the project due to unavailability of cash.
However, Sunders said a supportive fiscal regime, a lower power rate from Zesa and injection of new capital, among other measures, were expected to return the company to profitability.
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