$45.46 Million of Revenues and $0.06 EPS for 9 Months YTD
Highlights - Fiscal 3rd Quarter / 9 Months YTD - June 30, 2012
- $15.16 million in revenues ($45.46 million - 9 Months YTD)
- $0.58 million of net income allocable to common shareholders ($2.83 million - 9 Months YTD)
- $0.01 of EPS ($0.06 - 9 Months YTD)
- $0.83 million of EBITDA ($5.68 million - 9 months YTD)
- 9,536 ounces of gold produced (27,367 ounces - 9 Months YTD)
- Operating cash flows continue to be re-invested in Zimbabwe to fund expansion and development programs
- 8,000 meter exploration project at Camperdown Mine gold project continuing
- Contributions to Zimbabwe economy as described below
TORONTO, Aug. 14, 2012 /CNW/ - New Dawn Mining Corp. (TSX: ND) ("New Dawn" or the "Company"), a junior gold company with an expanding base of assets and operations in Zimbabwe, announced that its financial results and corresponding Management's Discussion and Analysis for the quarter ended June 30, 2012 have now been filed on SEDAR (www.sedar.com) and are also available to view on the Company's web-site at www.newdawnmining.com.
Effective as of October 1, 2011, the beginning of the Company's 2012 fiscal year, the Company, as required, has presented its financial statements based on International Financial Reporting Standards ("IFRS"), instead of Canadian Generally Accepted Accounting Principles ("Canadian GAAP") applied in previous reporting periods. Comparative figures for the fiscal year ended September 30, 2011 and its component fiscal quarters, originally prepared and reported under Canadian GAAP, have been restated to conform to IFRS.
All amounts presented herein are in United States dollars.
NEW DAWN'S OPERATIONS AND FOCUS
New Dawn is a Zimbabwe-focused junior gold company that is currently implementing a program to expand sustainable gold production at its mine sites in Zimbabwe. The Company's mining operations had a combined increase in gold production of approximately 9.2% during the quarter ended June 30, 2012, as compared to the previous quarter ended March 31, 2012. Subject to the factors noted below, the Company expects to report increased production and improved operating efficiency in future periods at its Zimbabwe mine sites as it implements plans to increase sustainable gold production across multiple mines though development of the substantial opportunities presented within the Company's three gold camps in Zimbabwe.
As part of the Company's development efforts, in April 2012, the Company commenced an 8,000 meter diamond drilling program at its Camperdown Mine gold project, which is part of the Company's Gweru Gold Camp located in the Shurugwi District of Zimbabwe. The program is expected to continue into calendar 2013. Based on the results of this drilling program, the Company may consider additional exploratory work to define and develop this opportunity.
The expansion of the Company's mining operations and exploration programs is premised, in substantial part, on access to adequate debt and/or equity financing, as well as finalisation and implementation of the Company's Plan of Indigenisation, as discussed below at "Indigenisation". The Company's ongoing expansion efforts could also be impacted by various other factors, including, for example, the world price of gold, taxes and royalties, mining fees, power and labour costs, the Zimbabwe operating environment, and potential changes to environmental regulations in Zimbabwe, which could effect operations and require revisions to the Company's capital allocation budget.
CONTRIBUTIONS TO ZIMBABWE ECONOMY
The Company mining operations in Zimbabwe have contributed to the Zimbabwe economy in various ways as follows:
- Five mines currently operating in Zimbabwe and expanding production and employment.
- Payments in respect of royalties, taxes, license fees, levies and other amount to the Government of Zimbabwe and various local authorities amounted to $2,400,000 for the quarter ended June 30, 2012, while net income to common shareholders and non-controlling interests was only $770,000 for the same period.
- Payments in respect of royalties, taxes, license fees, levies and other amount to the Government of Zimbabwe and various local authorities amounted to $7,100,000 for the nine months ended June 30, 2012, while net income to common shareholders and non-controlling interests was only $3,417,000 for the same period.
- The Company has grown its workforce at its various mine sites in Zimbabwe by 1,171 workers or 69% during the past 21 months, from 1,691 employees at September 30, 2010 to 2,862 employees at June 30, 2012.
- The Company has invested $2,800,000 and $11,000,000 in its Zimbabwe operations during the three months and nine months ended June 30, 2012.
- The Company has invested $20,900,000 in its Zimbabwe operations during the past 21 months, from October 1, 2010 through June 30, 2012.
- The Company sources a majority of its operational supplies and services from local Zimbabwean businesses.
- The Company contributes materially to the health, education, welfare and support of the people in the villages around the Company's mine sites.
The finalisation and implementation of the Company's Plan of Indigenisation and the resultant funding from indigenous investor groups are expected to provide New Dawn with access to additional capital resources to support its efforts to increase sustainable gold production from its properties in Zimbabwe, thus expanding its employee base and contributing to the overall growth and development of the Zimbabwe economy.
Selected Quarterly Information
The selected financial information set out below is based on and derived from the unaudited condensed consolidated financial statements of the Company for each of the quarters listed.
|Quarterly Period|| June 30,
| March 31,
| December 31,
|Net income allocable to common shareholders||$583,499(1)||$140,631||$2,104,104||$2,349,494|
|Earnings per common share - basic and diluted||$0.01||$0.00||$0.05||$0.06|
|Weighted average common shares outstanding:|
|Common shares outstanding - quarter end||43,612,383||43,612,383||42,949,736||42,949,736|
|Gold produced (ounces)||9,536||8,736||9,095||8,814|
|Gold sold (ounces)||9,433||8,816||9,171||8,246|
|Revenue per ounce (5)||$1,608||$1,685||$1,684||$1,705|
|Cash costs per ounce (3)||$1,239(3)||$1,151||$1,029||$1,038|
|Gold produced (ounces)||8,702||7,926||8,399||8,212|
|Gold sold (ounces)||8,570||8,043||8,459||7,712|
|(1)||Net income allocable to common shareholders for the period ended June 30, 2012 includes an adjustment arising from the reversal of a wage accrual provision of $800,000 in respect of calendar 2011 (see "Net Income Allocable to Common Shareholders and EBITDA" below).|
|(2)||Attributable ounces of gold are calculated on the basis of the Company's proportionate ownership of total ounces after adjusting for the non-controlling interests' share of gold production and sales (see "Non-IFRS Measures" in Management's Discussion and Analysis for the three months and nine months ended June 30, 2012 and 2011).|
|(3)||Cash Costs per Ounce and EBITDA measures are not recognized accounting measures under IFRS (see "Non-IFRS Measures" in Management's Discussion and Analysis for the three months and nine months ended June 30, 2012 and 2011).|
|(4)||Excludes the reversal of the wage accrual provision noted in (1) above.|
|(5)||Revenue per ounce is calculated by dividing revenue by the ounces of gold sold.|
Consolidated gold production was 9,536 ounces of gold (8,702 ounces attributable) for the quarter ended June 30, 2012, as compared to 6,841 ounces of gold (6,355 ounces attributable) for the quarter ended June 30, 2011, an increase of 39.4% (36.9% increase on an attributable basis).
Consolidated gold production for the quarter ended June 30, 2012 increased by approximately 9.2% (9.8% increase on an attributable basis), as compared to the previous quarter ended March 31, 2012 of 8,736 ounces (7,926 ounces attributable).
Consolidated gold sales were $15,162,843 ($13,776,012 attributable) for the quarter ended June 30, 2012, as compared to $9,791,973 ($9,197,031 attributable) for the quarter ended June 30, 2011, an increase of 54.8% (49.8% increase on an attributable basis). The average sales price per ounce of gold sold was $1,608 for the quarter ended June 30, 2012, as compared to $1,516 for the quarter ended June 31, 2011.
Consolidated gold sales for the quarter ended June 30, 2012 increased by 2.1% (1.7% increase on an attributable basis), as compared to the previous quarter ended March 31, 2012 of $14,857,212 ($13,551,287 attributable). The average sales price per ounce of gold sold was $1,608 for the quarter ended June 30, 2012, as compared to $1,685 for the quarter ended March 31, 2012.
100% of sale proceeds were received in US dollars.
NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS AND EBITDA
Net income allocable to common shareholders was $583,499 for the quarter ended June 30, 2012, as compared to $140,631 for the quarter ended March 31, 2012, an increase of $442,868 or 314.9%, and as compared to $358,042 for the quarter ended June 30, 2011, an increase of $225,457 or 63.0%. Earnings per share were $0.01 for the quarter ended June 30, 2012, as compared to $0.00 for the quarter ended March 31, 2012, and as compared to $0.01 for the quarter ended June 30, 2011. Net income allocable to common shareholders for the quarter ended June 30, 2012 includes an adjustment arising from the impact of the reversal of an $800,000 wage accrual provision, as described below.
The Company also provides a non-IFRS financial metric, EBITDA, to assist investors in assessing the Company's operating performance. EBITDA adjusts net income before allocation to non-controlling interests to eliminate the impact of income taxes, as well as certain other defined operating and financing costs. EBITDA was $831,161 for the current quarter ended June 30, 2012, as compared to $1,262,829 for the previous quarter ended March 31, 2012, a decrease of $431,668 or 34.2%, and as compared to $1,412,643 for the comparable quarter ended June 30, 2011, a decrease of $581,482 or 41.2%. Because of the distortive effect of the reversal of the wage accrual provision described below, EBITDA measures for the quarter ended June 30, 2012 exclude this adjustment.
During the period from January 1, 2011 to December 31, 2011, the Company included a portion of an estimated wage increase for its mine workers in Zimbabwe in its normal payroll disbursements and accrued for the balance. The original accrual determination was based on all information then available that indicated that the accounting recognition test had been met and, under the measurement requirements of applicable accounting standards, the amount was estimated at $800,000. With new information recently available to the Company, a further review of this matter indicated that the entire provision should be reversed. Accordingly, this accrual of $800,000 has been reversed in the statement of operations for the three months ended June 30, 2012.
The financial results for the quarter ended June 30, 2012 illustrate the continuing challenges faced by the Company as it moves forward with its expansion plans but lacks the capital to ensure that this process is implemented efficiently. These issues have been compounded by the geological issues that were encountered earlier in the year at Turk and Angelus Mine. Operations at Turk and Angelus Mine are showing improvement as the revised mining plan at Turk and Angelus Mine is being implemented, and this process is expected to take several months to complete. Accordingly, as continuing improvements are made at Turk and Angelus Mine, an increasing amount of underground ore is produced at Dalny Mine, and Golden Quarry Mine continues to expand its operations, improved operating results are expected over the next several quarters.
CASH COSTS PER OUNCE
The cash costs per ounce of gold produced for all of the Company's mines were $1,239 for the quarter ended June 30, 2012, as compared to $1,024 for the comparable quarter ended June 30, 2011, and as compared to $1,151 for the previous quarter ended March 31, 2012. Cash costs per ounce of gold produced exclude the impact of the reversal of the wage accrual provision discussed above at "Net Income Allocable to Common Shareholders and EBITDA".
Cash costs per ounce have been adversely impacted during 2012, in part as a result of significant increases in various base costs, including labour and mine supplies. In addition, the costs of the initial work being carried out at Wanderer Mine, part of the Gweru Gold Camp, and the continuation of underground preparatory work at Camperdown Mine are being expensed as incurred. Costs at Dalny Mine have also increased with the decreasing average grade of the tailing sands being processed, as well as costs incurred at Turkois Mine (an outside section on the Dalny shear zone), as it is being prepared for mining operations. Costs at Turk and Angelus Mine were maintained at a level approximately equal to those recorded for the prior quarter, and costs at Old Nic Mine marginally improved as compared to the prior quarter despite increasing power disruptions. These factors have contributed to the increase in cash costs for the quarter ended June 30, 2012. However, the Company believes mining and processing costs will trend downward over the next several quarters, as production levels increase and grades improve, although cost pressures, to some degree, will tend to offset the anticipated improvements.
COMMUNITY EMPOWERMENT AND CORPORATE SOCIAL RESPONSIBILITY
The over-riding spirit of the Company has been and continues to be meeting standards of good corporate citizenship in all the communities in which it operates. As previously reported, over the last 15 years, the Company has been and continues to be active in assisting local communities, including arranging educational initiatives and providing local community infrastructure and support. There is a significant element of community involvement and support included in the Company's Plan of Indigenisation, which is expected to form the core of the Company's future involvement with the local communities (see "Indigenisation" below).
In the spirit of the Indigenisation and Economic Empowerment policy of the Government of Zimbabwe, the Company is proactively formalizing its approach to Corporate Social Responsibility ("CSR"), thereby moving to a more sustainable and equitable model. As a first step towards this more structured approach, the Company has started to establish an appropriate framework for its CSR plan and process that can, on a permanent basis, empower the residents of the communities around its mine sites. This approach initially consists of establishing a partnership philosophy that is intended to promote self-sustainability, followed by incorporating a long-term, shared vision for development in the local communities in which the Company operates, with broad-based Company, community and local government support. In this model, each community, with the guidance and encouragement of facilitators, provides the direction and determines priorities, with the Company providing support to achieve the goals as mutually defined. Projects that could be selected by the communities to which the Company would provide its support include those related to education, health, particularly HIV/AIDS issues, community based businesses, local infrastructure and energy projects and planning for sustainable development. By applying this model, even after the local mines have closed, the Company is seeking to offer residents of the local communities an improved and sustainable standard of living.
The Company has retained an outside consulting group to assist in the establishment of the relevant framework and methodology for its CSR plans, and preliminary work has started in one of the communities surrounding the Company's Turk and Angelus Mine. Initial results have been positive, and the Company expects to be in a position to apply the program, with some modifications, at its various other mine sites in Zimbabwe in the near future, thus providing further community-based support.
The Government of Zimbabwe is in the process of implementing an indigenisation policy wherein all domestic businesses are required to be 51% owned by indigenous Zimbabweans. New Dawn's Zimbabwe operating subsidiaries, Casmyn Mining Zimbabwe (Private) Limited, Falcon Gold Zimbabwe Limited and Olympus Gold Mines Limited, are all currently non-indigenous under the indigenisation legislation and the related regulations.
New Dawn's Plan of Indigenisation was designed and structured to accomplish compliance with the requirement for 51% ownership by indigenous Zimbabweans, and was also designed to take into account the interests of other key stakeholder groups. The Company's Plan of Indigenisation was timely filed with the Zimbabwe Ministry of Youth Development, Indigenisation and Economic Empowerment (the "Ministry") in April 2011. Since then, the Company has been in confidential discussions with the Ministry and the National Indigenisation and Economic Empowerment Board ("NIEEB") with respect to the components of, and participants in, the Company's Plan of Indigenisation.
New Dawn's Plan of Indigenisation consists of several components, including engaging directly with various indigenous investor groups and potential financing sources for an aggregate investment representing a 36% effective equity interest in New Dawn. The Company has entered into non-binding term sheets with three indigenous investor groups, and is in the process of preparing formal subscription agreements and dealing with related matters. Also included in the Company's Plan of Indigenisation is the establishment of Community Share Ownership Trusts and Employee Share Ownership arrangements representing equity interests in the Company's Zimbabwe operating subsidiaries of 10% to the communities and 5% to the employees.
With respect to the indigenisation structure contained in the Company's Plan of Indigenisation, in a letter to the Company dated April 19, 2012, NIEEB proposed for the Company's consideration a substantive modification to the allocation of equity and the form of consideration to be paid by the respective parties. By letter dated April 27, 2012, the Company responded, requesting clarification for the basis of NIEEB's proposal and also noting a number of significant issues that needed to be addressed. The Company responded with a follow-up letter to NIEEB dated June 15, 2012, noting that no response had been received by that date. Subsequently, on July 19, 2012, representatives of the Company and NIEEB met to review the status of the Company's Plan of Indigenisation. The Company is continuing to engage in confidential discussions with the Government of Zimbabwe, through the Ministry and NIEEB, to facilitate the finalisation and implementation of the Company's Plan of Indigenisation.
As previously noted, the Company's Plan of Indigenisation contemplates the establishment of Community Share Ownership Trusts and Employee Share Ownership arrangements reflecting equity interests of 10% and 5%, respectively, in the Company's Zimbabwe operating subsidiaries. These equity interests are expected to provide a direct and broad-based participation in New Dawn's Zimbabwe mining operations by indigenous Zimbabweans. New Dawn anticipates moving forward to formalise and establish these Community Share Ownership Trusts and Employee Share Ownership arrangements during 2012, in a manner that is expected to directly benefit the targeted recipients.
Through fostering equity ownership by both the communities around the Company's mine sites and the Company's employees in Zimbabwe, while at the same time generating the investment of new capital by indigenous parties in the Company at fair value, New Dawn is seeking to fulfill its obligations to comply with the indigenisation laws and regulations in a manner that is both socially beneficial and economically viable.
The finalisation and implementation of the Company's Plan of Indigenisation and the resultant funding from indigenous investor groups are expected to provide New Dawn with access to additional capital resources to support its efforts to increase sustainable gold production from its properties in Zimbabwe, thus expanding its employee base (2,862 employees in Zimbabwe at June 30, 2012) and contributing to the overall growth and development of the Zimbabwe economy.
Due to various multi-jurisdictional legal, securities, tax and regulatory issues, the Company expects that the implementation of its Plan of Indigenisation may take several months or more to accomplish. Since a key part of the Company's Plan of Indigenisation is the allocation of a 10% equity interest in its Zimbabwe operations to the respective communities around its mine sites, New Dawn is taking steps to formalise and establish the Community Share Ownership Trusts during 2012.
As there still continues to be substantial uncertainty surrounding the implementation of the indigenisation policy in Zimbabwe, there can be no assurances that the Company will be successful in its efforts to comply with the indigenisation laws and regulations under commercially viable terms and conditions, or at all. The Company is currently unable to predict the effect of an inability to conclude or implement its Plan of Indigenisation. Further information will be provided to shareholders as and when such discussions with the Government of Zimbabwe have been concluded, or when developments otherwise warrant.
POTENTIAL TRANSACTION INVOLVING COMPANY'S FALGOLD SUBSIDIARY
New Dawn currently owns approximately 84.7% of Falcon Gold Zimbabwe Limited ("Falgold"). Falgold is an indirect operating subsidiary of the Company (through the Company's 100% ownership of its Central African Gold subsidiary) included in the Company's consolidated financial statements, and Falgold's shares are listed and traded on the Zimbabwe Stock Exchange.
The Company has initiated a formal process in Zimbabwe, which involves a legal proceeding requiring court approval and approval of the non-controlling shareholders of Falgold, to acquire the approximately 15.3% of the issued shares of Falgold that the Company does not currently own. This process includes either a conversion of the shares held by the non-controlling shareholders of Falgold into common shares of New Dawn or the acquisition of the Falgold shares by New Dawn for cash.
However, as all of the terms and conditions of this proposed transaction have not yet been finalised, there can be no assurance that this process will proceed and culminate in a completed transaction. In addition, this transaction will require compliance with various legal, securities, tax and regulatory issues.
This transaction is part of New Dawn's ongoing effort to simplify and rationalise the group and capital structure of the Company, which included the previous elimination of non-controlling shareholders of Central African Gold, a subsidiary of New Dawn, in 2010 and 2011.
ABOUT NEW DAWN
New Dawn is a junior gold company currently focused on expanding its gold mining operations in Zimbabwe. New Dawn owns 100% of the Turk and Angelus Mine, the Old Nic Mine and the Camperdown Mine. In addition, New Dawn, through its Falgold subsidiary, owns approximately 85% of the Dalny Mine, the Golden Quarry Mine and the Venice Mine (currently not in operation), and a portfolio of prospective exploration acreage in Zimbabwe. These six mines, five of which are currently operational, are divided into three significant gold camps.
In addition to gold production, New Dawn is also 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 mine sites and production facilities, and current exploration programs, is a growing gold mining company in Zimbabwe, active in both gold production and gold exploration.
The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or the accuracy of this release.
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, operating results, 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, operating risks, mining risks, political and foreign risk, indigenisation risk, uninsurable risks, competition, environmental regulation and liability, government regulation, currency fluctuations, and dependence on key employees. See "Risk Factors" in the Company's Annual Information Form - 2011. 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
Visit New Dawn on the internet at: www.newdawnmining.com
E-mail New Dawn at: [email protected]