Falcon Gold to become New Dawn subsidiary

FALCON Gold Zimbabwe will later this month convene a meeting of shareholders to seek approval to become a full subsidiary of New Dawn Mining Corporation Under a scheme of arrangement, minority shareholders hold approximately 15,3 percent of shares in the Zimbabwe Stock Exchange- listed gold producer.

The company had initiated a formal process requiring court and non-controlling shareholder approval.

Falgold said the High Court had ordered that the meeting consider the proposal to sell their share in the firm or get new shares in the Canadian-listed company.

"The 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," the company said.

New Dawn carried out a similar process between 2010 and 2011, when it bought out non-controlling shareholders of its subsidiary, Central African Gold (CAG).

As of February this year, New Dawn had increased its interest in CAG to approximately 95,2 percent, up from 89,9 percent in 2010 and 88,7 percent years back.

New Dawn owns 100 percent of the Turk and Angelus, Old Nic and Camperdown mines. In addition, through Falgold, it owns approximately 85 percent of the Dalny and the Golden Quarry mines, the Venice mine (which is not in operation), and a portfolio of prospective exploration acreage in Zimbabwe. In the quarter ended June 30, New Dawn's gold output stood at 9 536 ounces compared with 6 841 ounces for the similar period last year, a 39,4 percent increase.

The current quarter gold production figure represented a 9,2 percent increase from production figures recorded in the quarter to March 2012 of 8 736oz. Gold sales for the period under review totalled US$15,1 million compared with US$9,7 million for the same period quarter last year, representing a 54,8 percent increase. Average sales price per ounce of gold sold during the quarter was US$1 608, better than the US$1 516 recorded for the same period last year.

Earnings per share for the quarter just ended stood at US$0,01.

New Dawn said it was still in the process of implementing its indigenisation compliance plan, which so far includes non-binding term sheets with three indigenous investor groups. "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," said New Dawn.