Falgold booming but…..

Although it made a profit of $739 million in the six months to March, gold producer Falcon Gold Zimbabwe (Falgold) says it might cease operations before the end of its financial year.

It says the profit is likely to be wiped off by escalating costs which had gone up by 13 percent by the end of March. Since then, electricity had gone up by 1300 percent with the company’s energy bill shooting up from $15 million a month to $169 million a month.

The price of fuel had also gone up by 1000 percent. Besides, the company was dogged by electricity cuts which could cost it 10 kgs of gold each month.

To add to its woes, the company had not been paid $559.3 million of its profit by the central bank, and at the time of reporting in mid-May, it was owed a further US$446 000, being the 50 percent foreign currency for the 82.6kgs it had produced since April 1.

The company had made a dramatic turnaround from a net loss of $5.8 million during the first half of last year to a net profit of $502 million. It produced 63.42 kgs of gold a month in the six months.

Dalny Mine produced 32.26 kgs a month with 18.73 kgs coming from the dump treatment and 13.52 kgs from underground mining. This was a slight decline from 25.9 kgs a month from dump treatment and 13.88 kgs from underground mining.

Golden Quarry produced 15.69 kgs a month an increase from 13.23 kgs but production at Camperdown dropped from 19.05 kgs a month to 15.47 kgs.

Venice Mine was non productive but was kept on a care and maintenance basis. Revenue for the mine shot up from $339.7 million to $2 billion more than the $1.4 billion the company realised for the year ending September. Its net profit for the year ending September was $27.4 million.

But despite the news that the mine might close down, its share was the most popular on the Zimbabwe Stock Exchange and has risen by over 3700 percent since the beginning of the year.

(20 VIEWS)