Press release from CNW Group
New Dawn Reports Results for the Quarter Ended March 31, 2013
Tuesday, May 14, 2013
New Dawn Reports Results for the Quarter Ended March 31, 201317:05 EDT Tuesday, May 14, 2013
TORONTO, May 14, 2013 /CNW/ - New Dawn Mining Corp. (TSX: ND) ("New Dawn" or the "Company"), a junior gold company focused on developing its gold mining assets and operations in Zimbabwe, announced that its financial results and corresponding Management's Discussion and Analysis ("MD&A") for the quarter ended March 31, 2013 have now been filed on SEDAR at www.sedar.com and are also available on the Company's web-site at www.newdawnmining.com.
Unless otherwise indicated, all amounts are presented in United States dollars.
Reflecting current limitations on the availability of investment capital and the recent price of gold, the Company has revised its near-term operating strategy to focus on improving operating efficiencies and processes in a steady-state/low-growth production model based on currently installed plant and infrastructure. The Company expects this phase to continue until market conditions improve and the Company is able to access debt and/or equity capital in sufficient amounts to fund the expansion and development of its mining operations and exploration programs, which, in turn, are primarily conditioned on finalisation and implementation of the Company's Plan of Indigenisation, as well as any impact from unforeseen and/or deleterious changes to the business environment in Zimbabwe.
By the second half of the quarter ended March 31, 2013, the Company had addressed the power and ore issues that had adversely impacted operating results at the Dalny Mine during the period from October 2012 through January 2013, and had resolved the disruptions caused by an illegal strike during the second half of January 2013. Despite these difficulties, the Company was still able to increase overall production during February and March 2013. Looking ahead, further production improvements are targeted, with an emphasis on increasing operating efficiency and reducing costs, particularly in response to the decrease in the price of gold subsequent to March 31, 2013.
Production for the quarter ended March 31, 2013 increased by approximately 2.0% (2.0% increase on an attributable basis), as compared to the quarter ended December 31, 2012, and by approximately by 5.9% (8.7% increase on an attributable basis), as compared to the quarter ended March 31, 2012.
In mid-April 2013, there was a significant downward adjustment to the world price of gold, and since then the price of gold has stabilised in the approximate range of $1,420 to $1,480 per ounce, roughly 10% below the average selling price for the quarter ended March 31, 2013.
With the decrease in the world gold price that occurred in April 2013 and the negative impact on the Company's operations, the Company has implemented an immediate strategic review to identify various alternatives, including restructuring and divestitures, and to select the appropriate alternatives to ensure the ongoing financial viability of the Company assuming that gold prices remain at current levels. This review includes a critical analysis of each of the Company's operations to determine their ability to achieve or maintain profitability under the current operating and business environment. The Company is also considering operational changes that may be necessitated by a further decrease in gold prices.
The Company's operations and development plans could also be impacted by various other factors, including, for example, increased taxes and royalties, mining fees, power and labor costs, 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.
SELECTED FINANCIAL INFORMATION
This selected financial information should be read in conjunction with the Company's interim unaudited consolidated financial statements, including the notes thereto, for the periods referenced.
Quarterly Results (Unaudited)
The following table sets forth select unaudited condensed consolidated interim financial and other information for the Company for the quarter ended March 31, 2013, and for both the immediately preceding quarter ended December 31, 2012 and for the quarter ended March 31, 2012.
|Net income (loss) allocable
to common shareholders
|Earnings (loss) per share -
basic and diluted
|Ounces of gold:|
|Cash Costs per ounce (1)||$1,306||$1,403||$1,151|
|Revenue per ounce||$1,608||$1,712||$1,685|
|Adjusted EBITDA (1)||$417,446||$(319,064)||$1,937,404|
|Ounces of gold:|
(1) Cash Costs per ounce, Adjusted EBITDA and Attributable measures are not recognized accounting measures under International Financial Reporting Standards ("IFRS") (see "Non-IFRS Measures" below).
REVIEW OF FINANCIAL RESULTS
As previously described, the challenges encountered during the quarter ended March 31, 2013, particularly at the Dalny Mine, resulted in decreasing operational efficiency during the period. During the quarter ended March 31, 2012, operations were adversely impacted by a short-term work stoppage and certain geological, structural and technical mining issues at the Turk and Angelus Mine, and by various previously reported operational issues at the Dalny Mine.
The Dalny Mine, which the Company acquired as part of the Central African Gold transaction in June 2010, has experienced elevated operating costs for some time, reflecting the Company's efforts to implement its plan to develop sustainable and profitable underground mining operations. These elevated costs reflect the ongoing dewatering process, the continuing program of repair and replacement of underground equipment that had been submerged for a protracted period of time, power issues, labor strife, and the costs associated with ramping up operations, exacerbated by a lack of investment capital as a result of delays in approval of the Company's Plan of Indigenisation. Once the Company has completed this process, which is expected to take through the remainder of calendar 2013 and perhaps beyond, subject to the availability of sufficient investment capital, underground mining costs are expected to stabilise and begin to decline. In addition, as the gold production rate increases, the Company expects to realise increased operating efficiencies, with an expected corresponding downward trend in cash costs per ounce.
Gold production for the quarter ended March 31, 2013 was 9,253 ounces (8,612 ounces attributable), as compared to gold production of 8,736 ounces (7,926 ounces attributable) for the quarter ended March 31, 2012.
As compared to gold production for the previous quarter ended December 31, 2012 of 9,069 ounces (8,440 ounces attributable), gold production for the current quarter ended March 31, 2013 increased by 2.0% (2.0% increase on an attributable basis).
Consolidated gold sales for the quarter ended March 31, 2013 were US$14,986,200 (US$14,026,506 attributable), as compared to US$14,857,212 (US$13,551,287 attributable) for the quarter ended March 31, 2012, an increase of 0.9% (3.5% increase on an attributable basis). The average sales price per ounce of gold was US$1,608 and US$1,685 for the quarters ended March 31, 2013 and 2012, respectively, a decrease of $77 or 4.6%.
As compared to consolidated gold sales for the previous quarter ended December 31, 2012 of US$16,612,476 (US$15,332,853 on an attributable basis), consolidated gold sales for the current quarter ended March 31, 2013 decreased by 9.8% (8.5% decrease on an attributable basis). The average sales price per ounce of gold was US$1,608 and US$1,712 for the quarters ended March 31, 2013 and December 31, 2012, respectively, a decrease of $104 or 6.1%. The Company received 100% of proceeds from gold sales in US dollars.
Net Income (Loss) Allocable to Common Shareholders
Net income (loss) allocable to common shareholders was $(14,727) for the quarter ended March 31, 2013 ($0.00 per share, basic and diluted), as compared to $140,631 ($0.00 per share, basic and diluted) for the quarter ended March 31, 2012, and as compared to $(826,870) ($0.02 loss per share, basic and diluted) for the quarter ended December 31, 2012.
Operating results for the quarter ended March 31, 2013, although an improvement over the quarter ended December 31, 2012, continued to be negatively impacted by operating inefficiencies and elevated mine operating costs.
Adjusted EBITDA for the quarter ended March 31, 2013 was $417,446, as compared to $(319,064) for the quarter ended December 31, 2012, and as compared to $1,937,404 for the quarter ended March 31, 2012.
Adjusted EBITDA for the quarter ended March 31, 2013, although an improvement over the quarter ended December 31, 2012, continued to be negatively impacted by operating inefficiencies and elevated mine operating costs.
Cash Costs per Ounce
The previously noted issues encountered at the Dalny Mine during the quarter ended March 31, 2013, together with the difficulties faced at the Golden Quarry Mine and the Old Nic Mine, had an adverse impact on cash costs. As illustrated in the table below, the positive operating results from the Company's other operations were insufficient to outweigh the substantial production issues encountered at the Dalny Mine during this period. Although the results for the quarter ended March 31, 2013 reflect the initial stages of a recovery from these issues, average cash costs for all mines for the quarter ended March 31, 2013 were $1,306 per ounce, which, although still elevated, was an improvement over the average cash costs of $1,403 per ounce for the quarter ended December 31, 2012.
Production and cash costs by mine for the quarter ended March 31, 2013 were as follows:
|Old Nic Mine||
|Total quantity of
|Total cash costs||$4,726,056||$1,299,252||$2,585,981||$3,471,029||$12,082,318|
|Cash costs per
The Company's short-term focus is to reduce mine operating costs and increase operating efficiencies under a steady-state/low-growth production model with the existing plant and infrastructure.
OPERATING IN ZIMBABWE
Contributions to the Zimbabwe Economy
During the three months ended March 31, 2013 and 2012, and the year ended September 30, 2012, the Company's Zimbabwe operations made payments to the Zimbabwean Government and its agencies as follows:
|Three months ended March 31,||Year ended
|Gross revenue||$ 14,986,200||$ 14,857,212||$ 61,947,433|
|Taxes and levies|
|Corporate taxes||$ -||$ 187,315||$ 187,315|
|Licenses and levies||147,214||108,578||267,638|
|Rural electrification levy||105,133||141,299||487,507|
|Deductions from employees||667,960||705,489||3,116,704|
|Total, taxes and levies||$ 2,463,210||$ 2,596,584||$ 10,412,614|
Percentage of reported gross
|Government controlled entities|
|Electricity (ZESA)||$ 2,230,186||$ 2,458,259||$ 9,071,452|
The Zimbabwe government received, directly and indirectly, excluding power costs, an amount equal to 16.4% of gross revenue for the three months ended March 31, 2013. In addition, the Company continued to source approximately 70% of its equipment and consumable supplies and services from Zimbabwe-based suppliers.
The Government of Zimbabwe is in the process of implementing an indigenisation policy wherein all domestic businesses are required to be 51% beneficially owned and controlled 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 not only accomplish compliance with the requirement for 51% ownership by indigenous Zimbabweans, but also to establish broad-based economic empowerment structures, while also taking into account the interests of key stakeholder groups.
The Company's Plan of Indigenisation is still under consideration by the Government of Zimbabwe. The Company is working to facilitate the finalisation and implementation of its Plan of Indigenisation. Information with respect to the efforts taken by the Company to comply with the indigenisation laws and regulations over the past few years are included in the Company's Management's Discussion and Analysis for the quarter ended March 31, 2013.
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 a Plan of Indigenisation under terms acceptable to all stakeholders and regulatory authorities.
The Company has reported certain performance measures that are not recognized accounting measures under IFRS, specifically, Adjusted EBITDA, Cash Costs per Ounce, and Attributable measures. These non-IFRS performance measures do not have any standardised meaning and, therefore, are not necessarily comparable to similar measures presented by other companies. However, the Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors may find this information useful in their evaluation of the Company's performance. Accordingly, these non-IFRS measures are intended to provide additional information, and they should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Information on these performance measures and their calculation is included in the Company's Management's Discussion and Analysis for the quarter ended March 31, 2013 filed on SEDAR (www.sedar.com) and available on the Company's web-site (www.newdawnmining.com).
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 gold camps.
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, 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:
Investor Relations Contact: Richard Buzbuzian +1 416.585.7890
Visit New Dawn on the internet: www.newdawnmining.com
E-mail New Dawn at: email@example.com