HomeBusinessFalgold loses US$2m in Dalny Mine deal

Falgold loses US$2m in Dalny Mine deal


ZIMBABWE Stock Exchange (ZSE)-listed gold producer Falcon Gold says it has lost more than US$2 million in a deal involving the disposal of Dalny Mine to

RioGold is a subsidiary of RioZim, another ZSE-listed resources outfit with interests spanning across several minerals in Zimbabwe.

A circular released by Falgold last week said the two parties entered into the deal in 2016, but US$2,27 million remained outstanding.

However, a dispute erupted between the two mining giants before it was settled.

“The dispute was referred to arbitration, and in the interim the balance outstanding was held in escrow,” Falgold said in a shareholder update in which it is seeking authority to delist from the ZSE.

“The arbitration was concluded in favour of the company, but the arbitral award has been challenged by RioGold at the High Court,” the statement said.

Falgold said a judgement was expected from the court.

It said Falgold directors had been advised that the money had since been converted to Zimbabwe dollars at a rate of US$1:ZW$1, in compliance with conversion laws announced by government last year.

In February, Falgold sought to delist from the ZSE saying the listing was no longer beneficial to the company due to legal compliance and audit costs.

It said it was no longer raising capital through trading in its shares.

Falgold has struggled to raise between US$2,5 million and US$3 million to repair mills at Golden Quarry Mine, its key asset.

De-listing is one of two strategies, including a buyout of minority shareholders, being pursued before majority shareholder, Canada-based New Dawn, rescues the firm whose operations have been grounded by a long-drawn-out crisis.

Trading in Falgold shares was suspended in March after it failed to publish financial results in time.

“A number of structures have been discussed to address Falcon Gold’s working capital issues (and the legal paths to implement such structures), but New Dawn has advised that the existence of the approximately 15 percent minority interest, combined with the continued listing of Falcon Gold’s shares on the ZSE, are the factors that are preventing New Dawn from being able to provide the critically needed capital injection into Falcon Gold,” the miner said last week.

“In essence, it is against New Dawn’s economic interest, and would furthermore be fiduciarily irresponsible for New Dawn to provide funding to Falcon Gold with minority interest still in place,” said Falgold.

An offer of $0.13 per share has been made to minority shareholders.

At least 75% of shareholders are required to pass the vote to delist during an extraordinary general meeting later this month.

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