NEW Dawn Mining has extended a US$2 million loan facility to Central African Gold (CAG), a company it acquired in June, as interim financing to meet the firm’s cash requirements.
CAG has already drawn US$750 000 from the financing expected to rekindle the mining company’s operations, New Dawn said on Tuesday.
“New Dawn is proceeding with a comprehensive review of all aspects of CAG’s assets and operations, including mineral reserves and resources, operations, management, control structures and systems, listing status, capital structure and future capital requirements,” said Graham Clow, chief financial officer and corporate secretary at New Dawn.
New Dawn’s acquisition of CAG caused a stir with local authorities saying it was against the country’s indigenisation regulations. The issue has also been referred to the Competition and Tariff Commission (CTC) for review.
CTC director Alexander Kububa confirmed to businessdigest that they were looking into the issue.
“The proposed acquisition of Central African Gold by New Dawn Mining Corporation was notified to the commission (CTC) for the examination of the transaction’s competitive effects last month,” said Kububa. “The examination is currently at an advanced stakeholder consultations stage.”
New Dawn said they were evaluating CAG’s short-term and long-term working capital requirements to fund the development and operations of the company’s gold mining assets.
This funding would be addressed through a combination of internally generated funds and new debt or equity.
“New Dawn is currently developing a revised and updated strategic business plan in light of its acquisition of a controlling interest in CAG, with a view towards reaching annualised gold production of 50 000 to 60 000 ounces within the next 18 to 24 months,” added Clow. “Additionally, the company is reviewing and assessing CAG’s extensive portfolio of exploration properties in Zimbabwe for future investment and development.”
A senior auditor with KPMG, Lynton Richmond, who prepared an independent report said the ability of CAG to continue as a going concern was dependent on their ability to achieve significant cost savings in the short term and “effecting suitable financial and other arrangements to enable the development of the Zimbabwean assets, on which the group’s and company’s viability is dependant”.
“These conditions, along with other matters, indicate the existence of a material uncertainty which may cast significant doubt on the group’s and the company’s ability to continue as a going concern,” said Richmond.
New Dawn made an investment resulting in the acquisition of debt and a controlling shareholding interest in CAG in mid June resulting in the company owning around 87% of the gold mining company which has operations in Zimbabwe.
CAG, directly and through its wholly-owned subsidiary, Falcon Mines Holdings owns a 100% interest in Olympus Gold Mines Limited, a private Zimbabwe company, and an approximate 84.7% interest in Falcon Gold Zimbabwe Limited, a company currently listed and trading on the Zimbabwe Stock Exchange.
The properties owned by CAG’s subsidiaries are in limited operations or are under care and maintenance after the economic problems in 2008 forced many mining companies to close shop.
Gold miners were required to sell their produce to Fidelity Printers which was not remitting proceeds, but the marketing of the metal has since been liberalised.