LISTED resources group Falcon Gold has reportedly placed its oldest mine, Old Nic, under care and maintenance with immediate effect due to falling gold prices and operational challenges, thereby rendering more than 300 workers jobless, NewsDay, has learnt.
BY MTHANDAZO NYONI
Sources close to the development yesterday told NewsDay that the director of operations, only identified as Rheeder, read a memo written by New Dawn president and chief executive Ian Saunders to the workers on Tuesday around 10am.
“Director of operations Rheeder came here yesterday (Tuesday) and read a memo to the workers indicating that the mine had been placed under care and maintenance with immediate effect,” said a source.
“Workers were told to go on unpaid leave and they will be notified when the mine reopens. However, what is painful is that they said they don’t have money to pay workers and yet some of us have children at school. This is bad.”
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Sources added that the mine cited the drop in gold production as well as falling commodity prices.
Efforts to get a comment from Saunders were fruitless as he was said to be outside the country. He also did not respond to an email sent to him on Tuesday afternoon.
Early this year Saunders told shareholders at a general meeting in Bulawayo that Falcon Gold could cease operations because of poor commodity prices and was struggling to attract buyers for its mothballed Dalny Mine because of poor investor appetite for Zimbabwe.
“There is serious doubt about the company’s ability to survive as it is currently configured. Accordingly, the company may be forced to consider shutting down its remaining operations, either temporarily or permanently. There is need for a shift in gold price, otherwise it’s a very bleak future,” he said then.
Saunders said the company would only become profitable if there was a change to the tax laws and power cost base.
Falgold requires $1,3 million to upgrade equipment at its Golden Quarry Mine in Shurugwi which would increase its output by up to 50%.
Falgold reported a net loss of $1,8 million for the full-year to September 30 in 2014, compared to a $12,5 million loss in the prior year, on the back of depressed gold prices and costs of maintaining Dalny Mine.
The mine, which consists of more than 3 500 claims, was closed in August 2013 and placed under care and maintenance due to falling gold prices and operational challenges such as high power costs that accounted for 45% of the company’s budget.
It placed its more than 900 workers on unpaid leave.
Canada-listed junior miner New Dawn has an 85% controlling shareholding in Falgold.
Falgold also owns Turk Mine near Bulawayo and Venice Mine in Kadoma.