Gold worth US$5m vanishes from Falgold

Source: Gold worth US$5m vanishes from Falgold | The Financial Gazette May 11, 2017

By Cyril Zenda

…Chief assayer dismissed

ZIMBABWE Stock Exchange mining-listed firm, Falcon Gold Zimbabwe (Falgold), lost nine gold bullions worth nearly US$5 million from its safe and managed to keep the theft under wraps for the past five years, the Financial Gazette’s Companies & Markets can reveal.
Supreme Court documents in a labour case revealed that in 2012, Falgold dismissed its chief assayer, Happison Sigauke, after the gold had gone missing from a mine safe at Chakari’s Dalny Mine for which he was the sole custodian.

Falgold chief executive officer, Jack Murehwa, and executive chairman, Ian Saunders, both refused to comment on the issue.

Murehwa, who is barely six months in the job, did not say if the gold had been recovered and what its value was.
“I can confirm that Mr Sigauke appealed, without success, all the way to the Supreme Court against dismissal for the offences he had committed,” Murehwa said in his written response to questions.
“For a more detailed synopsis on the circumstances pertaining to the case, I suggest you read the court papers, which are available as a public record,” he added.
Saunders also refused to comment.
“We have no comment at this time,” Saunders said.

The court records indicated that nine bars of gold bullion went missing from the company’s safe of which Sigauke, the chief assayer, was the sole custodian and no further details were given as this was purely a labour matter in which Sigauke was contesting his dismissal.

A standard gold bar weighs an average of 400 ounces (12,4 kilogrammes) and at a price of US$506 400 each, the nine bars were worth just over US$4,5 million.

Shortly after the theft, Falgold shut down Dalny Mine and put it under care and maintenance until it was sold to resources giant, RioZim, for US$8 million after struggling for more than three years to get a buyer.

After disposing of Dalny, Falgold retained operations at Turk Mine near Bulawayo and Golden Quarry Mine in Shurugwi.
Canadian-listed New Dawn Mining Corporation owns a controlling 84,67 percent in Falgold. Its major shareholders are Falcon Mines Society Anonyme and Boundary Investments (Private) Limited that own 57,1 percent and 27,57 percent respectively.

During the 17 years that Sigauke was responsible for the safe, its spare key was missing and he also kept the only key he had in a drawer that was never secured according to court papers.
The gold was discovered missing in May 2012, four months after Sigauke last opened it when company staff wanted to get some gold samples from the safe. The Supreme Court confirmed Sigauke’s dismissal after concurring with the decision of the Labour Court that had found him guilty of acting in a way that was inconsistent with the fulfilment of his duties by not changing the safe locks when he was fully aware that the spare key was missing.

Government has been struggling over the years to control gold smuggling, which worsened during the hyperinflationary crisis due to poor prices paid by the Reserve Bank of Zimbabwe-owned Fidelity Printers and Refineries.
Due to dwindling suppliers to Fidelity, Zimbabwe was expelled from the London Bullion Market Associations in 2008 after its gold output dropped to just 3,6 tonnes, way below the required minimum of 10 tonnes per annum. This was a huge drop from its 1999 peak production of 27,1 tonnes.

However, since 2009, concerted efforts have been underway to ensure that national gold output increases, as the country pursues an annual target of 30 tonnes by 2018.
The measures put in place by government mainly revolve around plugging loopholes through which the metal leaks to the black market under the “Gold Production and Surveillance Project”— a carrot and stick approach that ensures that all gold produced in the country is sold through the official channels.

The project involves the provision of financial support to viable mining ventures as well as buying gold from miners, especially small-scale players, at competitive prices. It also involves dealing heavy-handedly with gold smugglers.

Government teams on compliance have been visiting milling plants as well as gold mines thoroughly inspecting them and this resulted in more than 200 gold firms being prosecuted and heavily fined for feeding gold to the black market.

These various policy measures have seen gold production taking an upward trend from the 3, 6 tonnes recorded in 2008 to 12,8 tonnes in 2011; 14,7 tonnes in 2012; 20 tonnes in 2015 and 23 tonnes in 2016.