http://www.herald.co.zw/inside.aspx?sectid=14598&cat=8

CAG seeks partners to develop Zim assets

Business Reporter

CENTRAL African Golds board is engaged in the identification of strategic financiers and partners to further develop its Zimbabwean assets after shelving plans to dispose of them.

The companys chairperson and president, Mr Roy Pitchford, said the stated strategy of the board was to focus on the development of its Zimbabwean assets.

"To that end, the board continues to be actively engaged in the identification of suitable sources of finance and/or partners with which to develop further the Zimbabwe assets, to the benefit of all shareholders

"And also that the company is not currently examining a disposal of the Zimbabwe assets," said Mr Pitchford.

The group operates Dalny Mine, Venice Mine, Golden Quarry Mine, Camperdown Mine Quarry and Old Nic Mine.

Mr Pitchford had issued a statement saying several options were being considered, including further debt financing, introduction of strategic partners, and the sale of the Falcon Group, to investors who would undertake to provide adequate funding to fully restore the mining operations of the company.

He added that CAG was to advise Falcon Gold on the future plans for the company during the first quarter of 2010.

"We look forward to resolving the future of the mines in a manner that ensures their continued operation and growth and thereby providing a secure and prosperous future to all staff and management," said Mr Pitchford in a statement in December.

The decision by the board to reverse the intended sale of local assets comes at a time when the group said it would probably reinvest US$5 million realised from the disposal of its mining assets in Mali into its Zimbabwean operations.

CAG also secured a US$1,2 million loan to capitalise its Zimbabwean mines.

Recent reforms by the Government had given the group confidence to restart gold production, exploration and development programmes.

"Subject to financing, we anticipate bringing Golden Quarry and Camperdown into production during 2010, before developing various other target properties," Mr Pitchford said.

The group, in its annual report, said the boards experience remains that Zimbabwe is still a challenging environment in which to operate with ongoing and anticipated electricity shortages, a limited supply of skilled labour and very rundown plant and equipment.

However, it added that once the initial production levels were achieved, plans would have to be put in place not only to update the plant, but also to increase gold production to better reflect the potential of the extensive gold deposits owned by the company.

"After a turbulent start to the year, we are now focused on advancing our assets in Zimbabwe, which we believe offer excellent mid to longer-term prospects.

"The political situation in Zimbabwe remains challenging. However, we believe we are seeing the first green shoots of recovery," added Mr Pitchford.

He said substitution of the Zimbabwean dollar with the United States dollar and other hard currencies had vanquished hyperinflation and this and the recent World Bank grant all pointed to an improvement in operational conditions.

"With this in mind, our immediate aim is to move into a cash-positive position and then expand production at our Zimbabwean mines," said Mr Pitchford.

The group would look at the wider portfolio of existing assets with a view to enhancing their value and take advantage of their first mover position in the country to acquire additional projects.

For the half year ended June 30 2009, the group produced 9,52kg of gold from 22 963 tonnes treated, a yield of 0,41 grams per tonne.

Falgold attributed the reduced production to slow build-up following the decision to place the mines on care and maintenance since December 2008.

Falcon Gold posted a loss of nearly US$2 million in the year ended June 2009.

The company said the loss was a result of low production in the period after closing some mines over viability.

Dalny Mine treated 22 963 tonnes of ore during the period producing 9,52kg of gold while Venice Mine remains on care and maintenance with initial exploration going on.

Central African Gold to take advantage of new monetary policies in Zimbabwe

Roy Pitchford, Chief Executive Officer of mining company Central African Gold, outlined the companys strategy for its Zimbabwean operations. Pitchford said that the company will restart mining operations to take advantage of new monetary policies being introduced to stimulate the Zimbabwe economy. It will restructure and optimise mining operations and complete scoping/prefeasibility studies. In terms of growth targets, he said that the open pit at Camperdown (expansion) and Dalny (seven underground workings which can be exploited using open-pit mining methods) will be prioritised.
In a slide titled Why Zimbabwe, Pitchford explained that the Falgold Gold Zimbabwe team, in which the company has an 84.7% stake, has experience of mining and exploration in Zimbabwe. This has ensured the company make the most of its gold projects in the country. He also pointed to the good infrastructure, skills and easy access that the country has, as well as it being in close proximity to South Africa. These reasons, along with the fact that modern exploration methods have yet to be applied to many deposits in Zimbabwe, has given the company confidence to continue work on its gold projects there.

The company will optimise capital expenditure in line with the economic/political developments going on in the country. It will also continue to actively engage with the Reserve Bank of Zimbabwe, the Ministry of Mines and the Zimbabwe Stock Exchange in order to keep up with developments.

Zimbabwe is one of the largest historical producers of gold and to date has mined 74.2 Moz. The country has 6,000 known gold deposits. Falgold and Olympus Gold Mines (100% owned by Central African Gold) control the rights to extensive claim areas located throughout Zimbabwe, with exploration properties and five mining operations centred on the Kadoma, Shurugwe and Bulawayo regions.

7 years on gold multiples of 2003 price our ZIMBABWE asset




http://www.insiderzim.com/jul03falcon.html
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.

$6.5 million boost for Zimbabwe mines


CENTRAL Africa Gold (CAG), the London-listed gold mining and exploration company says it has raised more than US$6 million to recapitalise its Zimbabwe operations which include Dalny and Venice mines near Kadoma as well as Golden Quarry located just outside Gweru.

CAG which is quoted on the small-cap Alternative Investment Market (AIM) says the majority of the funds were raised from the disposal of its interests in the West African country of Mali.

The company, which was formed in 2003 after acquisition of the local assets of Falgold and Olympus Mining it is shifting focus to Zimbabwe in a clear boost to the countrys fledgling economy.

Mining has since resumed at the groups local assets after being scaled-down to care and maintenance at the height of the economic challenges that buffeted the local economy and confidence has also been boosted by the monetary policy measures announced by the central bank in February.

Meanwhile, disposal of CAGs Mali operations raised about US$5 million while another US$1.2 million was secured from a consortium of financial institutions that include Investec Asset Management, Emerging Capital Partners and HBD Zim Investments.

Acting Chairman, Roy Pitchford said management has worked hard to ensure that adequate funding is available for the Zimbabwean operations adding the capital injection represents a significant step forward in securing this objective.

"The funds raised by the sale of CAG's Malian assets, together with the new funds injected into the business by Investec Asset Management, Emerging Capital Partners and HBD Zim Investments, and the deferral of our obligations under the existing convertible loan agreements gives the Company the opportunity to develop its remaining assets and generate shareholder value.

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