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Falgold’s loss widens

Troubled gold producer, Falcon Gold Zimbabwe Limited (Falgold) widened its loss for the half year to March 31, 2019 to $27,2 million from $1,6 million during the same period last year as production marginally fell.

According to Falgold, the increase in comprehensive loss was mainly a result of exchange rate losses amounting to $23,9 million.

Basic loss per share came in at 24,5 cents compared to 1,5 cents in the same period last year.

Gold production went down 3,7 percent to 1 849 ounces compared to 1 920 ounces produced in the same comparable prior year period.

Mineral production expenses increased to $5 240 676 (-183,70 percent of revenue) for the six months under review, as compared to $3 707 570 (-143,32 percent of revenue) for the same period in the prior year.

General and administrative expenses rose 46,06 percent during the half year under review compared to the same period last year.

According to Falgold, these costs increased to 16,51 percent of mining and processing costs for the half year from 15,91 percent of mining and processing costs in the comparable prior year period.

Total assets remained flat at $4,6 million.

Apart from the usual foreign currency challenges affecting local industry, Falgold has of late battled other problems such as engineering failure at its Golden Quarry Mine as well as industrial action that resulted in flooding of its mine shafts, damage to equipment and disruption of normal production processes.

These adversely affected cash flows as well.

Although Golden Quarry has not been operational due to these challenges, management remains upbeat of bringing it back into business after it undertakes some plant repairs.

“Termination of power supplies by ZETDC further compounded the problems. As a result of this and other cash flow challenges, the Golden Quarry Mine has not been operational,” said Falgold in a statement accompanying financials.

“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. 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,” said Falgold.

While Falgold acknowledges the good global gold prices as well as the positive developments being made to the operating environment in mining industry, the tax regime remains unfavourable for business to thrive.

“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,” said Falgold.

Falgold’s shares were suspended from trading on the Zimbabwe Stock Exchange in February this year. No dividend was declared.

Troubled gold producer, Falcon Gold Zimbabwe Limited (Falgold) widened its loss for the half year to March 31, 2019 to $27,2 million from $1,6 million during the same period last year as production marginally fell.

According to Falgold, the increase in comprehensive loss was mainly a result of exchange rate losses amounting to $23,9 million.

Basic loss per share came in at 24,5 cents compared to 1,5 cents in the same period last year.

Gold production went down 3,7 percent to 1 849 ounces compared to 1 920 ounces produced in the same comparable prior year period.

Mineral production expenses increased to $5 240 676 (-183,70 percent of revenue) for the six months under review, as compared to $3 707 570 (-143,32 percent of revenue) for the same period in the prior year.

General and administrative expenses rose 46,06 percent during the half year under review compared to the same period last year.

According to Falgold, these costs increased to 16,51 percent of mining and processing costs for the half year from 15,91 percent of mining and processing costs in the comparable prior year period.

Total assets remained flat at $4,6 million.

Apart from the usual foreign currency challenges affecting local industry, Falgold has of late battled other problems such as engineering failure at its Golden Quarry Mine as well as industrial action that resulted in flooding of its mine shafts, damage to equipment and disruption of normal production processes.

These adversely affected cash flows as well.

Although Golden Quarry has not been operational due to these challenges, management remains upbeat of bringing it back into business after it undertakes some plant repairs.

“Termination of power supplies by ZETDC further compounded the problems. As a result of this and other cash flow challenges, the Golden Quarry Mine has not been operational,” said Falgold in a statement accompanying financials.

“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. 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,” said Falgold.

While Falgold acknowledges the good global gold prices as well as the positive developments being made to the operating environment in mining industry, the tax regime remains unfavourable for business to thrive.

“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,” said Falgold.

Falgold’s shares were suspended from trading on the Zimbabwe Stock Exchange in February this year. No dividend was declared.

Source :

The Herald

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