11
08.13
mining news
TSX-listed New Dawn Mining Corp has an-
nounced that it has initiated a wide-ranging
cost reduction programme aimed at reducing
cash operating costs at its five operating gold
mines in Zimbabwe. The company currently
employs approximately 3 000 people at these
mining operations.
The decline in the gold price since October
2012 has had a significant and increasingly
negative impact on New Dawn’s mining oper-
ations, profitability and operating cash flows.
“As previously reported, in mid-April 2013,
in response to the continuing decline in the
price of gold, the company implemented, and
has now completed, a strategic review of its
production facilities and their operating meth-
ods and costs to identify various options to
mitigate the impact of the falling gold price,”
says New Dawn in a recently issued statement.
“This review included a critical analysis of the
company’s mining operations to determine the
respective ability of each mine to operate in a
commercially viable manner under the current
operating and business environment.”
New Dawn says it expects to improve pro-
duction and significantly reduce mine operat-
ing costs but cautions that if a mine is unable
to attain and maintain operations at a cash
break-even level in the short-term, it will be
placed on care and maintenance.
New Dawn says that implementation of
operating cost reduction programmes at its
mine sites has already had a positive impact
on operating costs in June 2013 and that it
expects this trend to continue.
Measures taken include successful en-
gagement with its employees through Works
Councils at the various mine sites in Zim-
Sliding gold price puts pressure on New Dawn
babwe, with agreement being reached with
employees to reduce basic remuneration by
25 % for an initial period of three months ef-
fective July 15, 2013. These reductions will
be made for all levels of staff in Zimbabwe,
including management.
There has also been a focus on operat-
ing efficiencies, including adjustment to the
‘cut off’ grades that are being mined, with
expected improvement in recovered grades
and thus gold output.
In addition, there has been an elimination/
reduction of certain administrative positions
in Canada and Zimbabwe and a reduction or
deferral of certain costs at the company’s cor-
porate offices in Toronto, Canada, including
management compensation and board fees.
New Dawn has also negotiated temporary
price reductions from suppliers for various
critical supplies ranging from 5 % to 15 %.
Says New Dawn: “If the aforementioned
measures are not sufficient to enable the com-
pany to operate its mines in a commercially vi-
able manner and generate sufficient operating
liquidity, or if the world price of gold continues
to decline further, the company may be forced
to consider shutting down its operations, either
temporarily or permanently, and/or liquidating
its assets in a formal or informal arrangement.”
New Dawn owns 100 % of the Turk and
Angelus, Old Nic and Camperdown mines. In
addition, through its Falcon Gold Zimbabwe
Limited subsidiary, it currently owns 84,7 %
of the Dalny, Golden Quarry and Venice
mines, and a portfolio of prospective explora-
tion acreage in Zimbabwe. With the excep-
tion of the Venice mine, all of these mines are
currently operational.
ASX-listed African Energy Resources (AFR)
has prepared and successfully submitted
a Request for Registration and Information
(RFRI) to South Africa’s Department of Energy
for the development of a 300 MW power sta-
tion and captive coal mine to supply energy to
the South African electricity grid.
The key aspects of the submission are as
follows:
In December 2012, in support of its In-
tegrated Resource Plan for Electricity
2010-2030, South Africa added close to
11 000 MW of new generating capacity to
its forward procurement programme.
Of this, 2 500 MW has been reserved for
base-load coal-fired generation, including
domestic and imported energy, from Inde-
pendent Power Producers.
AFR has registered its interest in supplying
300 MW in conjunction with a South African
BEE partner.
The project is to be located at AFR’s Sese
coal project in Botswana, with coal supply
from Block-C.
The off-take party would be South African
utility Eskom.
Separately, Botswana recently released
a Request for Pre-Qualification (RFPQ) for
a 300 MW independent power project to be
built at the existing Morupule power com-
plex (Brownfield IPP). It is anticipated that an
RFRQ for an additional 300 MW power plant
to be developed at an alternative site in Bo-
tswana will be issued shortly (Greenfield IPP).
AFR intends to lodge a submission for the
Greenfield IPP in conjunction with its project
partners, with whom advanced negotiations
regarding the terms of such joint develop-
ment are nearing completion.
According to AFR, studies indicate that
the geometry and low strip-ratio of the Sese
Block-C coal resource will result in mining
costs towards the bottom of the Southern
African cost curve. This permits the develop-
ment of power projects with very competitive
tariffs for the sale of electricity to regional
utilities and private companies. Measured
resources defined at Sese Block-C alone
contain enough coal to support an estimated
2 400 MW of generating capacity for over 25
years, thereby providing substantial expan-
sion opportunities.
AFR pursues power generation opportunities
