In a shareholder trading update, Falcon Gold Zimbabwe Director and Retired Chairman, Roy Pitchford said the company remained cautiously optimistic about the overall recovery of the countrys mining sector. Power supplied to the mines continues to be erratic, which negatively affects production, operational efficiencies and with the typical high fixed cost of mining, it directly impacts viability, Pitchford said. The company was also paralysed in its operations by the uncertainty over the indigenisation of the economy. It is still unclear how the Indigenisation Act will be implemented, as the deadline for the setting of sector specific equity percentages is 28 February 2011, and this uncertainty continues to weigh on market sentiment.
He said despite the positive policy changes in the countrys economy, there were still significant challenges to conducting mining operations in the country, including the electricity shortages, a shortage of skilled labour, and the general state of the companys plant and equipment. For the year ended 31 December 2009, the company incurred a loss of US$3 474 974.
Pitchford noted that policy changes that had significant and positive impact on the operating environment for the companys gold mining operations included that gold producers, after receipt of a gold export permit, are allowed to sell their gold outside the countrys borders.
The price realised for gold sales will thus be at the international market price and the payment for gold will be at normal trade terms, he said. He said the company board understood the need for a different strategy for the rejuvenation, recapitalisation and operation of the companys mines, particularly in light of the operating environment and the companys financial position
Post published in: Economy