Chihuri defies High Court order

FALCON Gold, a major mining company in the country, may soon go under the hammer due to severe operational problems.

The company’s chairperson, Roy Pitchford, said the mining concern was exploring several options to secure the future of the firm.

Among the options, he said, was selling the company to new investors.

“The focus of Central Africa Gold (CAG) is now to secure the future of Falcon Gold and to this end several options are being considered including further debt financing, the introduction of a strategic partner either at the CAG or the Falcon level and the sale of the Falcon Group to investors who undertake to provide adequate funding to fully restore the mining operations of the company,” said Pitchford.

The future of Falcon Gold, one of the biggest gold mines in Zimbabwe, would be made known during the first quarter of this year.

Pitchford said lack of funding since 2008 and non-payment of gold lodgments by the Reserve Bank of Zimbabwe impacted negatively on production levels.

“The absence of adequate funding during 2008 resulted in very limited gold production, a situation that has continued throughout 2009. The suspension from trading on the AIM exchange in London requested by CAG coupled with the world economic situation has prevented CAG from raising adequate capital,” Pitchford said.

He said the global economic downturn has made it impossible for CAG to support Falcon Gold.

The company’s principal property — Dalny Mine in Chegutu — last year treated 22 936 tonnes of ore producing 9,52 kg of gold and at an average yield of 0, 41g a tonne. Vince Mine in Kadoma, Golden Quarry and Camperdown Tribute in Shurugwi are under care and maintenance.

Several mines in the country have shut down in recent years, suffocated by hyperinflation, lack of skills, power and foreign currency.

Gold is a key foreign currency earner for Zimbabwe’s struggling economy and accounts for about 52% of total mineral production and a third of export earnings.

Gold deliveries fell to 13 000 kg last year from 21 300 kg the previous year with the central bank saying the mineral was being smuggled abroad where earnings were higher.

The mining sector has been on the decline since 2000. This is despite the fact the country has a huge base of mineral resources and that there had been a sustainable worldwide commodity price boom from 2004-2008.

Last year, Prime Minister Morgan Tsvangirai said the country could attract up to US$16 billion in exploration and mining investment if it corrected policies that have scared away foreign investors.

Mining has become a pillar of the country’s battered economy following the collapse of commercial farming.

But large mining houses have kept away from Zimbabwe’s mining sector after an economic crisis worsened by a nationalisation law requiring majority holding by locals in foreign-owned mines.

 

Nqobile Bhebhe