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needed to recapitalise and start new exploration programmes.
The company’s funding problems started early last year when former ultimate parent company, Central Africa Gold, failed to support Falcon in the form of a loan or through an injection of equity for recapitalisation.
Falcon, which turned over a paltry US$1,6 million from its gold sales for the financial year ended December 31 2010, only received US$5 million from new shareholders, New Dawn Mining Corporation.
New Dawn acquired 89 percent of CAG in June last year.
Unavailability of funding is threatening the completion of the group’s three phased strategic recovery programme that is expected to see the opening of new mines by 2014.
Falcon chairperson Mr Ian Saunders said: “The major uncertainty affecting the full implementation of the current phase is how the market will react to the recent announcements in respect of indigenisation.
“This uncertainty is adversely affecting the company’s ability to raise the additional capital estimated at between US$5 million and US$10 million, necessary to bring the company’s assets to a reasonable level of economic activity and to start exploration programmes on other prospective assets.”
Mr Saunders said his company had submitted a preliminary indigenisation implementation plan to Government for consideration.
He said they were not only expecting to comply with the Indigenisation and Economic Empowerment Act but will be broad based and provide access to the growth of the company.
“The board is maintaining a cautious optimistic stance that the indigenisation hurdle can be negotiated in a manner that is acceptable to all stakeholders. Parties involved in this process, in which case management anticipates that the necessary capital can be raised and the company’s production goals can be achieved,” added Mr Saunders.
Upon taking over control, new management faced many legacy issues that had been deferred for a considerable period as a result of the lack of working capital.
Part of the money from New Dawn was also used to resolve most of the legacy issues resulting in the resumption of operations at Dalny Mine in August last year, albeit on a limited base. Processing plant upgrades have also been implemented at Dalny Mine and the Golden Quarry refurbishment programme is still in process.
Meanwhile, the Government has expressed staid concerns over the acquisition of Central African Gold 87 percent stake by New Dawn Mining Corporation, saying the transaction was done without due adherence on Zimbabwe’s indigenisation and securities regulations.
News Dawn operates Golden Quarry, Venice, Camperdown, Dalny, Turk and Angelus Mines.