New Dawn shuts down Zimbabwe gold mine

via New Dawn shuts down Zimbabwe gold mine | MINING.com  by Frik Els

Shares in New Dawn Mining (TSE: ND) plunged nearly 14% on Friday after the junior gold mining announced it’s shutting down its 85%-owned Zimbabwe mine.

The Toronto-listed small cap is little traded and is worth $12.7 million with 45 million shares outstanding.

The Dalny mine located in the Kadoma region 175km southeast of Harare, the capital of Zimbabwe and produced 4,711 ounce in the first half of the year. New Dawn produced some $19,000 ounces from its six mines in the Southern African country.

The Zimbabwe Electricity Supply Authority cut power to the project over problems with bill payments and a statement by the Toronto-based company blames the “substantial fall in the price of gold over the last nine months, exacerbated by the impact of previously reported operational problems at the mine, has resulted in a serious liquidity problem.”

The Dalny mine which employs 900 people will be put on care and maintenance and staff have been placed on unpaid leave. The mine’s outstanding trade payables currently total about $3 million.

New Dawn said increasing power and staff costs, harsh royalty regime and an illegal strike contributed to the decision and the company also lays some of the blame for the shutdown on the African nation’s indigenisation policy:

A major underlying factor contributing to the Dalny Mine’s current difficulties has been the more than two year delay in the still incomplete approval process for the Company’s proposed Plan of Indigenisation. A timely approval of the Plan of Indigenisation had been expected to provide the Company with access to sufficient investment capital to fully fund the development of a cost efficient operation at the Dalny Mine. After years of underdevelopment, had an investment program in the Dalny Mine been implemented and completed as originally anticipated, the Dalny Mine would have been positioned to maintain profitable operations in today’s environment of lower gold prices and increasing costs.

 

COMMENTS

WORDPRESS: 8
  • comment-avatar

    900 employees, maybe an extra 2000 dependents , maybe 30 supplier companies with about 100 employees and 300 more dependents to be rendered to more poverty by the closure of this mine. All in all roughly about 3000 zimbos will be left worse off due to the closure of this gold mine, vakomana empowerment itai makangwara. Now you do the maths with Zimplats which employs in excess of maybe ±4000.

  • comment-avatar
    Chitova weGona 7 years ago

    So its another 900 people jobless! The ripple effect is so huge.Families wl suffer!

  • comment-avatar
    eztechplc 7 years ago

    Kasukuwere woye! Woye! Indigenisation woye, woye! Now the indigenous can take 100% ownership. Pliz musaite zvemufuku, create 900 jobs lost.

    • comment-avatar
      Nyoni 7 years ago

      Good idea eztecpric. But what concerns me is that what I see in what happened in agriculture was jobs created but people not paid. A win win situation.

  • comment-avatar
    Alexander 7 years ago

    Cry ma beloved country,God have mercy on Zimbabwe

  • comment-avatar
    imvi dzechembere 7 years ago

    Mviromviro dzemhanza mapfeka