New Dawn Reports Financial Results for the Quarter Ended March 31, 2011

Quarterly Revenues and Gold Production Levels Reach Record Highs

Net income of $0.02 per share for the quarter ended March 31, 2011,
compared to a net loss of $0.02 per share for the
quarter ended March 31, 2010

Q2 Fiscal 2011 - Quarter Ended March 31, 2011 Highlights

(All amounts are in US dollars)

  • Record consolidated gold sales of US$7.98 million for the quarter ended March 31, 2011, as compared to gold sales of US$3.80 million for the quarter ended March 31, 2010
  • Approximately 100% increase in consolidated gold sales for the quarter ended March 31, 2011, as compared to the quarter ended March 31, 2010
  • 83.4% increase in consolidated gold production for the quarter ended March 31, 2011, as compared to the quarter ended March 31, 2010
  • Net income of US$701,573 for the quarter ended March 31, 2011, as compared a net loss of US$461,372 for the quarter ended March 31, 2010
  • Adjusted EBITDA of US$1,718,172 for the quarter ended March 31, 2011, as compared adjusted EBITDA of US$1,063,935 for the quarter ended March 31, 2010, an increase of 61.5%

TORONTO, May 16 /CNW/ - New Dawn Mining Corp. (TSX: ND) ("New Dawn" or the "Company") announced that its financial results and corresponding Management's Discussion and Analysis for the quarter ended March 31, 2011 have now been filed on SEDAR and are also available to view on the Company's website at www.newdawnmining.com.

The Company prepares its consolidated financial statements in U.S. Dollars and in accordance with Canadian Generally Accepted Accounting Principles.

As a result of New Dawn having made an investment in Central African Gold Plc ("CAG Plc") in June 2010, in which it acquired an 88.7% controlling interest, New Dawn has consolidated the operations of CAG for accounting purposes from June 16, 2010.  Effective December 31, 2010, CAG Plc was delisted from AIM and effective January 28, 2011, it was registered as a private company and renamed Central African Gold Limited ("CAG Ltd"). New Dawn has increased its interest in CAG Ltd to approximately 96.8% as at May 13, 2011.

Q2 FISCAL 2011 - QUARTER ENDED March 31, 2011 HIGHLIGHTS

Selected unaudited quarterly financial information is presented below.

Fiscal 2011  Quarters ended
  March 31,
2011
December 31,
2010
Operations    
  Revenue $7,983,223 $6,458,735
  Net income for the period (1) 701,573 96,598
  Basic and diluted earnings per share (2) 0.02 0.00
     
Balance sheet    
  Total assets $50,168,964 $50,437,852
  Total liabilities 16,853,860 17,337,028
     
Other measures    
  Quantity of gold produced (oz) 6,226  4,808 
  Quantity of gold sold (oz) 5,747 4,715
  Intercompany loan repayments paid from Zimbabwe $- $-
  Cash costs per oz (3) $799 $821
  Revenue per oz (4) $1,389 $1,370
  Adjusted EBITDA (1) $1,718,172 $1,286,691
     
Attributable (1)    
  Revenue $7,510,160 $6,184,661
  Quantity of gold produced (oz) 5,854 4,577
  Quantity of gold sold (oz) 5,406 4,515

(1) Cash costs per oz, revenue per ounce, Adjusted EBITDA and Attributable measures are non-GAAP measures and are more fully described in the discussion at the end of the MD&A entitled "Non-GAAP Measures."  The calculation of cash costs per oz has been modified as discussed in the MD&A under "Non-GAAP Measures".
(2) Revenue per ounce is calculated by dividing revenue by the ounces of gold sold.

GOLD SALES

Consolidated gold sales for the quarter ended March 31, 2011 totalled US$7,983,223, (US$7,510,160 after adjusting for the minority interests' share of gold sales from the Central African Gold properties) at an average sales price per ounce of gold of US$1,389, as compared to US$3,801,780 (US$3,801,780 attributable) for the quarter ended March 31, 2010 at an average sales price per ounce of gold of US$1,109, an increase in revenue of 110.0% (97.5% increase on an attributable basis).

Consolidated gold sales for the quarter ended March 31, 2011 increased by 23.6% (21.4% increase on an attributable basis), as compared to gold sales for the previous quarter ended December 31, 2010 of US$6,458,735 (US$6,184,661 attributable) at an average sales price per ounce of gold of US$1,370.

100% of sale proceeds were received in US dollars.

GOLD PRODUCTION

Gold sales reached record levels as New Dawn reported increased consolidated gold production of 6,226 ounces of gold produced (5,854 ounces attributable to New Dawn, after adjusting for the minority interests' share of gold production from the Central African Gold properties) for the quarter ended March 31, 2011, as compared to 3,395 ounces of gold produced (3,395 ounces attributable) for the quarter ended March 31, 2010, an increase of 83.4% (72.4% increase on an attributable basis).

As compared to the production output of 4,808 ounces of gold produced (4,577 ounces attributable) for the previous quarter ended December 31, 2010, consolidated gold production for the quarter ended March 31, 2011 increased by 29.5% (27.9% increase on an attributable basis, after adjusting for the minority interests' share of gold production from the Central African Gold properties).

The increase in gold production was a result of greater tonnage mined and processed at the Turk Mine, as well as an increase in production output from the Central African Gold properties. During the quarter ended March 31, 2011, production output increased at both the Dalny and Old Nic Mines and, collectively, these mines contributed 2,200 ounces (1,828 ounces attributable) to New Dawn's total production output for the quarter ended March 31, 2011.  The Dalny and Old Nic Mines are expected to contribute an increasing proportion of New Dawn's consolidated gold production in future periods.

New Dawn's 100% owned Turk Mine produced 4,026 ounces of gold during the quarter ended March 31, 2011, as compared to 3,395 ounces of gold during the quarter ended March 31, 2010, an increase of 18.6%. Gold production at the Turk Mine for the quarter ended March 31, 2011 increased by 10.2%, to 4,026 ounces of gold, as compared to gold production for the previous quarter ended December 31, 2010 of 3,654 ounces of gold.

The Turk, Old Nic and Dalny Mines all experienced an increase in gold production in line with management's operating plan to reach a consolidated production run rate of 38,000 to 40,000 ounces of annualized gold production by December 2011.

CASH COSTS

Average cash costs per ounce of gold produced for all mines were US$799 for the quarter ended March 31, 2011, as compared to US$821 for the quarter ended December 31, 2010, and as compared to US$614 for the quarter ended March 31, 2010.

During the quarter ended December 31, 2010, mining operations, particularly at Turk Mine, suffered as a result of the increasingly unreliable and deteriorating power supply that resulted in significant unscheduled down time.  With the continuous power contract in place and full power available throughout the quarter ended March 31, 2011, this constraint on operations was eliminated.  With an increasing gold price and a stable power supply, the mine cut-off grade was reduced, thus lowering the grade of the ore processed by the mill. The decision with respect to the appropriate cut-off grade requires management to balance the objectives of both efficient mine operation and meeting revenue and cash flow targets, with the objective to maintain or improve the gross operating margin.  Management periodically reviews and reassesses this operating metric.

Both the Dalny and Old Nic Mines significantly improved their production volumes during the quarter ended March 31, 2011, in part as a result of their refurbished and updated mining facilities, thus increasing the quantity over which their fixed costs are allocated.  As a result, with respect to cash costs per ounce of gold produced during the quarter ended March 31, 2011, the Old Nic Mine experienced a 23.0% improvement and the Dalny Mine experienced a 25.6% improvement.

NET INCOME AND ADJUSTED EBITDA

For the quarter ended March 31, 2011, New Dawn reported quarterly consolidated net income of US$701,573, as compared a net loss of US$461,372 for the quarter ended March 31, 2010.

For the quarter ended March 31, 2011, New Dawn reported adjusted EBITDA of US$1,718,172, as compared adjusted EBITDA for the quarter ended March 31, 2010 of US$1,063,935.

With record gold sales and production levels, both net income and adjusted EBITDA improved on a period to period comparison.

Management anticipates a reduction in corporate overhead costs in future periods to more normalized levels, as the CAG Ltd restructuring, which is nearing finalization, will allow for significant cost reductions.  Management also expects that mining and processing operations should reflect increasing efficiencies from economies of scale as production levels increase.

ASSETS AND LIABILITIES

The Company's working capital (current assets minus current liabilities) at March 31, 2011 amounted to $7,443,961, as compared to $1,289,330 at September 30, 2010.  The increase in working capital during the six months ended March 31, 2011 was primarily attributable to a private placement of common stock for proceeds of $7,436,372 to several funds managed by an international investment firm based in the UK at CAN$1.80 per share completed in November 2010.

As at March 31, 2011, the Company has no funded long-term debt obligations.

As at March 31, 2011, the Company has other non-current liabilities of $12,143,487, as compared to $11,639,705 at September 30, 2010.  These liabilities consist of future income tax liability and mine reclamation and closure costs obligation.  The future income tax liability will become payable when the Company's ongoing investment in property, plant and equipment decreases such that depreciation expense exceeds the amount deductible for income tax purposes.  The mine reclamation and closure costs obligation, also known as asset retirement obligation, is the charge to date that operations have borne in respect of the estimated cost of rehabilitating mining sites in the future when the mines ultimately cease operations.  As the estimated mine life for the Company's various mines ranges from 12 to 30 years, management does not anticipate that this liability will require any significant cash outflows for the next several years.

INDIGENISATION

As previously reported, the Government of Zimbabwe is in the process of implementing an indigenisation policy wherein all domestic businesses are to be 51% owned by indigenous Zimbabweans.  New Dawn's Zimbabwe operating subsidiaries, Casmyn Mining Zimbabwe (Private) Limited, Falcon Gold Zimbabwe Limited and Olympus Mines Limited, are all non-indigenous companies for purposes of the Indigenisation and Economic Empowerment Act that was signed into law on March 9, 2008, and the related Regulations that were gazetted as Statutory Instrument 21 of 2010 issued on January 29, 2010.  A General Notice issued on March 25, 2011 stipulated that each non-indigenous mining company must submit an indigenisation implementation plan by May 9, 2011 and dispose of 51%, less any percentage previously indigenised to qualified indigenous Zimbabwean companies or investors, of its shares to a "designated entity" by September 25, 2011, which may, in certain circumstances, be extended by a further period of no more than three months.  In this regard, New Dawn filed its Indigenisation Implementation Plan (the "Plan") with the Government of Zimbabwe on a timely basis.

New Dawn believes that its Plan addresses the requirements of the legislation, and  includes engaging directly with indigenous capital partners in Zimbabwe, such as pension funds and investment firms that qualify as indigenous investors.  Additionally,  as part of its Plan, the Company is proposing to list its common stock on the Zimbabwe Stock Exchange (in addition to maintaining its primary listing on the Toronto Stock Exchange), in conjunction with a secondary offering of its common stock to indigenous investors in Zimbabwe.  The Plan also anticipates the establishment of employee and community share ownership plans for the benefit of indigenous Zimbabweans  that are intended to provide the opportunity for broad-based participation by indigenous Zimbabweans.

New Dawn is continuing to engage in confidential discussions with the Government of Zimbabwe in an effort to reach agreement about the terms, conditions and timing of an indigenisation program based on the previously submitted Plan that will be compliant with applicable legal requirements.  Upon reaching agreement with the Government of Zimbabwe, the Company expects to move expeditiously to implement its Plan.  The Company will provide further information to shareholders as and when such discussions have been concluded, or when developments otherwise warrant.  As of May 13, 2011, the Company has not received any response to the Plan that it has submitted to the Government of Zimbabwe.

There is currently substantial uncertainty surrounding the implementation of the recent indigenisation regulations and their potential impact on the Company.  There can be no assurances that the Company will be successful in its efforts to comply with the indigenisation laws and regulations.  Accordingly, if the Company is unable to obtain approval of the Government of Zimbabwe for its Plan (or amend the Plan in a commercially reasonable manner that is satisfactory to the Government of Zimbabwe), the Company could be required to transfer 51% of each of its Zimbabwe subsidiaries to a "designated entity" with payment uncertain, which would raise significant implications as to the Company's ability to continue to conduct its operations in Zimbabwe, as well as to obtain the funding necessary to continue to implement its current business plan.

Upon successful acceptance by the Government of Zimbabwe and implementation of New Dawn's Plan, the Company believes it would then have the additional working capital resources necessary to support its efforts to increase gold production to 100,000 ounces of gold on an annualized basis within the next four to five years.

ABOUT NEW DAWN

New Dawn is a Zimbabwe-focused junior gold company that is currently expanding its consolidated gold production to 50,000 to 60,000 ounces of gold within the next 18 to 24 months.  New Dawn targets further increasing gold production to 100,000 ounces of annualized gold production within the next four to five years.   New Dawn owns 100% of the Turk/Angelus Mine Complex in Zimbabwe.  New Dawn also owns a controlling interest in Central African Gold Limited ("CAG Ltd"), through its acquisition of an 88.7% controlling interest in CAG Ltd in June 2010 (subsequently increased to approximately 96.8%).  CAG Ltd owns substantial gold mining assets and operations in Zimbabwe, as well as extensive prospective acreage.  In total, New Dawn operates three significant gold camps in Zimbabwe containing six mines, three of which are currently producing gold and are in the process of expanding production.  One additional mine is currently in the process of being brought back into production.

As the Turk Mine and the adjacent Angelus Mine are now interlinked on several levels underground, management no longer considers it feasible to separate the two mining projects. Accordingly, they are now being treated for both operational and management purposes as one contiguous mining property, referred to as the Turk/Angelus Mine Complex. The Turk Mine is in production, and exploration work is continuing on the Angelus Mine.

Additionally, New Dawn, with its first mover advantage, is actively exploring on highly prospective ground employing modern exploration techniques and deploying capital in Zimbabwe, a country that is proven to be geologically rich, highly prospective, and significantly under explored.

New Dawn, with its large gold resource, existing production facilities and current exploration efforts, is well on the path to becoming a junior leading and then mid-tier gold mining company in Zimbabwe, active in both gold production and gold exploration.

Information on New Dawn's gold reserve and resource estimates is included at the Company's website at www.newdawnmining.com or in the Company's filings on SEDAR at www.sedar.com.

The TSX has not reviewed and does not accept responsibility for the adequacy or the accuracy of this release. Statements in this press release regarding the Company's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties, such as estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.

The contents of this news release were supervised and reviewed by Ian R. Saunders, B.Sc., who is President, Chief Executive Officer, and a Director of New Dawn Mining Corp., and who is a Qualified Person within the meaning of NI 43-101.

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 Annual Information Form - 2010.  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:

Investor Relations Contact:  Richard Buzbuzian +1 416.585.7890

President and Chief Executive Officer:  Ian R. Saunders +1 416.585.7890

Visit us on the internet:  http://www.newdawnmining.com or

Email us at:  info@newdawnmining.com

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