HARARE – Falcon Gold Zimbabwe Limited’s loss widened to US$4,8 million in the year ended September 30, 2018 due to reduced mineral production caused by the termination of a major mining contract and internal job action.
The loss broadened from US$684 074 in 2017 as gold sales fell 51percent to 78kg compared to 159kg for prior year due to prolonged industrial action by employees.
In a statement accompanying the financial results, Falcon Gold said Golden Quarry Mine workers went on strike from January 15 to March 13 last year and they refused to allow management access to the site that was required to maintain constant water pumping, leading to the mines flooding.
“As a result, the operations of both Golden Quarry and Camperdown mines were severely flooded and critical equipment was damaged, both on surface and underground. The Camperdown shaft was finally pumped dry by April 22, 2018 and operations then recommenced. The Golden Quarry Mine was finally pumped dry on June 6, 2018 and ore hoisting commenced on June 13, 2018,” Falcon Gold said.
“The Golden Quarry plant was started in early April 2018 and has been operating at a reduced throughput due to damaged equipment during the strike. As such there was very low gold production in the second quarter of 2018.”
The group’s net operating loss extended by 36 percent to US$3,2 million from US$5,09 recorded in prior year.
The gold miner was in February this year suspended from the local bourse after failing to produce results on time.
Gold sales were realised from the company’s sole operating gold processing plant at Golden Quarry near Shurugwi.
The average gold price increased by three percent from US$1 243 per ounce in 2017 to US$1 277 per ounce in the year ended September 30, 2018, while the world gold price remained depressed ranging between US$1 225 and US$1 280 per ounce.
The group’s general and administration expenses increased by 16 percent to US$1,3 million from US$1,1 million recorded in the same period in 2018.
Falcon Gold is still negotiating with the parent company on funds and once they are concluded, the group hopes that repairs to major equipment will be undertaken and creditor issues resolved, allowing Golden Quarry Mine to be re-opened.
Going forward, the group will not be able to continue operations if the existing conditions in the country persist.
“Due to the serious liquidity problems, the continued absence of significant investor appetite for Zimbabwe, and the lack of operating profits, management of the group is, of necessity, operating the group with a determined focus on addressing short-term issues as they arise, but there can be no assurances that the group will be able to continue to conduct operations should existing circumstances persist,” Falcon Gold said. “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.”