HomeBusiness DigestFalgold needs US$40m to boost production

Falgold needs US$40m to boost production

GOLD miner Falgold needs US$40 million in fresh capital to get its production past the 100 000 ounces annual production, New Dawn CEO Ian Saunders has said.

Report by Staff Writer
At the Scheme of Arrangement meeting held earlier this week in the capital, Saunders said if the group was unable to raise the US$40 million they needed, the company would be overstretched adding minority shareholders did not have the capacity to fund the capital in the current environment.

New Dawn, which has a controlling shareholding in the company at 85%, called for the scheme meeting which sought shareholders’ approval for the delisting of Falgold and the subsequent listing of New Dawn. The company would list by way of introduction.

Saunders said New Dawn’s common shares would continue to trade on the Toronto Stock Exchange.

At the meeting, shareholders voted unanimously to approve the scheme, which will bind all Falgold minority shareholders, subject to sanctioning by the High Court of Zimbabwe. A hearing will be held in the High Court on October 3 to consider sanctioning the scheme.

Under the arrangement, minority shareholders would be acquired by New Dawn, either for cash or newly issued common shares of New Dawn. Falgold will become a wholly-owned subsidiary of New Dawn.

There are approximately 17,049,000 Falgold ordinary shares held by Falgold minority shareholders. Under the Scheme, all of Falgold ordinary shares would be acquired by New Dawn, in exchange for either one New Dawn common share for every five Falgold shares, or US20 cents for every one Falgold share.
In the event Falgold shareholders do not make a choice between the two offers regarding the form of consideration that they wish to receive, Saunders said they would be paid cash for their Falgold shares.

Saunders justified the offer saying Falgold was worth much less relative to New Dawn when it was acquired in 2010. New Dawn took over when the share price of Falgold was at US4 cents.

The company expects a maximum of approximately 2,9 million common shares of New Dawn to be issued pursuant to the scheme.

However, a lesser amount of common shares may be issued, depending on how many Falgold shareholders choose to receive the cash alternative under the scheme.

The Reserve Bank of Zimbabwe (RBZ) will require the New Dawn common shares listed on the Zimbabwe Stock Exchange to be endorsed for trade in Zimbabwe only, save with the consent of the central bank.

New Dawn currently has 43,6 million common shares issued and outstanding.

Saunders said the group was in the process of making an application to the RBZ for the fungibility of New Dawn shares.

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