Falcon Gold reports loss, seeks recapitalisation

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    Harare – Gold mining and exploration group, Falcon Gold Zimbabwe Limited reported a net loss and reduced mineral production for the year ended 30 September 2018 largely affected by the termination of a major mining contract during the course of the period.

    The Group’s net loss widened 609% to US$4.9 million during the period under review compared to a net loss of US$684.1 recorded in the previous year ended 30 September 2017.

    Likewise, the company said net operating loss for the period was US$3.2 million as compared to a net operating loss of US$5.1 million in the previous comparative period.

    “The decrease in the operating loss in 2018 compared to 2017 was mainly as a result of reduced mineral production costs due to the termination of a major mining contract,” Falcon Gold said.

    “Gold sales for the year ended 30 September 2018 decreased by 81 kilograms or 51% to 78 kilograms, as compared to 159 kilograms for the year ended 30 September 2017, mainly due to a prolonged industrial action by employees.”

    Falcon which in February this year was suspended from the ZSE after failing to meet deadlines for financial results publication said the average gold price realised during the period under review was US$1 277 per ounce compared to 1 243 per ounce in the prior year, representing an increase of 3%.

    Mineral production expenses decreased by 20% to US$8.4 million compared to US$10.5 million in the prior year, while general administrative expenses increased by 16% to US$1.3 million during the review period from US$1.1 million in the previous year.

    The Group said it is considering options for an additional $2.5 million to recapitalise its operations, while cautioning that there can be no assurances that the Group will be able to continue to conduct operations should existing circumstances persist.

    “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,” the Group said.

    “Accordingly, and as stated previously, should the Group be forced to consider shutting down its remaining mining operations, either temporarily or permanently, and/or liquidating its assets in a formal or informal arrangement, then the Group may be unable to continue realising value from its assets and discharging its liabilities in the normal course of business.”

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