TORONTO, July 18, 2013 /CNW/ - New Dawn Mining Corp. (TSX: ND) ("New Dawn" or the "Company"), a junior gold company operating in
Zimbabwe, announced that it has initiated a wide-ranging cost reduction
program 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 in Zimbabwe.
The world price of gold reached a 12-month peak of approximately $1,790
per ounce on October 4, 2012. Since then the gold price had decreased
to approximately $1,658 per ounce by December 31, 2012, and then to a
low of $1,192 per ounce on June 28, 2013 (the last business day in June
and a level not seen since mid-2010). During the first half of July
2013, the gold price has been in the range of $1,200 to $1,300 per
ounce, but continued volatility is expected. The decline in the gold
price since October 2012 has had a significant and increasingly
negative impact on the Company's mining operations, 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 methods and costs to identify various options to mitigate the
impact of the falling gold price. 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. As the Company
continues implementation of the initiatives identified by its strategic
review, the Company expects to improve production and significantly
reduce mine operating costs. However, if a mine is unable to attain
and maintain operations at a cash break-even level in the short-term
under the current operating and business environment, the Company has
determined to place it on care and maintenance.
As a result of these efforts, the Company reports the following measures
have been or are being implemented:
Cessation of all capital development projects except those that need to
be commissioned in and/or to sustain operations for the next 6 months.
Implementation of operating cost reduction programs at its mine sites,
which have already had a positive impact on operating costs in June
2013 and which are expected to continue to have a positive impact on
operating costs in July 2013 and beyond.
Negotiation of temporary price reductions from suppliers for various
critical supplies ranging from 5% to 15%.
Successful engagement with its employees through Works Councils at its
various mine sites in Zimbabwe, with agreement being reached with
employees to reduce basic remuneration by 25% for an initial period of
three months effective July 15, 2013. The situation will be reviewed
at the conclusion of the three month period. These reductions will be
made for all levels of staff in Zimbabwe, including management.
Focus on operating efficiencies, including adjustment to the "cut off"
grades that are being mined, with expected improvement in recovered
grades and thus gold output.
Elimination/reduction of certain administrative positions in Canada and
Reduced or deferred certain costs at the Company's corporate offices in
Toronto, Canada, including management compensation and board fees.
The Company expects the above measures to impact results of operations
in a meaningful way subsequent to June 30, 2013, and does not expect
that their implementation will negatively impact gold production in the
short-term. The Company is also exploring other options, including
significant changes to its operating and capital structure,
divestitures, joint ventures and various structured financings. If any
of these initiatives come to fruition, the Company will advise
These actions reflect New Dawn's initial response to the recent
sustained decrease in the world gold price. In combination with the
uncertainty surrounding the implementation of indigenisation policy in
Zimbabwe and the current limitations on the availability of investment
capital, these factors have placed undue pressure on New Dawn's mining
operations in Zimbabwe.
If the aforementioned measures are not sufficient to enable the Company
to operate its mines in a commercially viable 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.
The Company's efforts to address and improve operating viability at its
mine sites in Zimbabwe are subject to various factors outside of its
control, including, for example, taxes and royalties, mining fees,
power costs, environmental regulations, the economic and business
environment in Zimbabwe, and potential changes to the legislative and
regulatory environment in Zimbabwe, any of which could impact the
Company's mining operations, capital requirements and ability to
operate in a commercially viable manner or at all.
ABOUT NEW DAWN
New Dawn is a junior gold company listed on the Toronto Stock Exchange
that is focused on developing its gold mining assets and operations in
Zimbabwe. New Dawn owns 100% of the Turk and Angelus, Old Nic and
Camperdown Mines. In addition, through its Falcon Gold Zimbabwe Limited
subsidiary, New Dawn currently owns 84.7% of the Dalny, Golden Quarry
and Venice Mines, and a portfolio of prospective exploration acreage in
Zimbabwe. With the exception of the Venice Mine, all of these mines are
currently operational, and are geographically divided into three major
The Toronto Stock Exchange has not reviewed and does not accept
responsibility for the adequacy or the accuracy of this release.
Additional information on New Dawn and the matters discussed herein can
be obtained on the Company's web-site at www.newdawnmining.com or in the Company's filings on SEDAR at www.sedar.com.
Special Note Regarding Forward-Looking Statements: Certain statements
included or incorporated by reference in this news release, including
information as to the future financial or operating performance of the
Company, its subsidiaries and its projects, constitute forward-looking
statements. The words "believe," "expect," "anticipate,"
"contemplate," "target," "plan," "intends," "continue," "budget,"
"estimate," "may," "schedule" and similar expressions identify
forward-looking statements. Forward-looking statements include, among
other things, statements regarding targets, estimates and assumptions
in respect of gold production and prices, operating costs, results and
capital expenditures, mineral reserves and mineral resources and
anticipated grades and recovery rates. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that,
while considered reasonable by the Company, are inherently subject to
significant business, economic, competitive, political and social
uncertainties and contingencies. Many factors could cause the
Company's actual results to differ materially from those expressed or
implied in any forward-looking statements made by, or on behalf of, the
Company. Such factors include, among others, risks relating to reserve
and resource estimates, gold prices, exploration, development and
operating risks, political and foreign risk, uninsurable risks,
competition, limited mining operations, production risks, environmental
regulation and liability, government regulation, currency fluctuations,
recent losses and write-downs and dependence on key employees. See
"Risk Factors" in the Company's Management's Discussion and Analysis -
2012. Due to risks and uncertainties, including the risks and
uncertainties identified above, actual events may differ materially
from current expectations. Investors are cautioned that
forward-looking statements are not guarantees of future performance
and, accordingly, investors are cautioned not to put undue reliance on
forward-looking statements due to the inherent uncertainty therein.
Forward-looking statements are made as of the date of this press
release and the Company disclaims any intent or obligation to update
publicly such forward-looking statements, whether as a result of new
information, future events or results or otherwise.
SOURCE: New Dawn Mining Corp.
For further information:
New Dawn investor relations can be contacted as follows:
Telephone: +1 416.585.7890 x 230
Visit New Dawn on the internet: www.newdawnmining.com