Medium-scale gold producer Falcon Gold Zimbabwe Limited (Falgold) announced Monday that it was negotiating with London-based African Consolidated Resources Plc (AFCR) for the disposal of its closed Dalny Mine at a cost of 8 million U.S. dollars.
Falgold, which is 84.7 percent owned by the Toronto Stock Exchange-listed New Dawn Mining Corporation (New Dawn), said in a cautionary statement that the bulk of the purchasing amount, 5.5 million, will go towards settlement of Dalny's liabilities.
The estimated net cash from the transaction is approximately 2. 5 million U.S. dollars," Falgold said.
Among other proposed terms of the transaction, AFCR would fully settle all known trade creditors of Dalny mine, settle the mine's labor costs and any capital gains tax or other tax liabilities due to the Zimbabwe Revenue Authority.
Falgold closed its 100 percent owned Dalny mine in August last year citing a serious liquidity problem spawned by the delay in approval of its indigenization plan by government, falling gold prices and operational challenges such as power disconnection due to failure to pay.
As part of the shut-down, an approximately 900 Dalny workers were placed on unpaid leave while the company was moved to care and maintenance.
At the time of shut-down, the company's debt was estimated at 3. 1 million U.S. dollars.