Business / Companies
Indigenisation affects New Dawn's recapitalisation plan
11 Jun 2013 at 11:26hrs | Views
Failure to get approval for its indigenisation plans has put a two-year hole in New Dawn Mining recapitalisation plans, CE Ian Saunders has said.
Saunders told an investors tour of Dalny Mine in Chakari that New Dawn Mining had been the first mine in the country to put a 51% indigenisation compliant plan. "We embraced the indigenisation plan because it is the law of the country and it's the only way that we are going to drive a sustainable business in the country."
He added that the issue on indigenisation revolved around the structure and how it was going to be paid for and how it will be developed going forward.
As part of the group's plan for indigenisation, 10% would be taken up by the community at zero cost, 5% will be taken up by employees while 36% will be for New Dawn at entry level. However the plan has not been accepted as acceptable since it was not broad based.
Saunders said as a result, the group had failed to raise the $25-$40 million of capital needed to drive the business to an annualised 100 000oz from the current circa 40 000-50 000oz.
"Unfortunately the delay in getting approvals has had two effects; there has been little or no growth in the business in the last twelve months while the cost base has gone upwards and secondly is that we have not been able to grow lower cost ounces so that the business becomes more fundamental and this has become more dramatic now especially that the gold prices have come down."
Saunders said the group has not been able to raise capital because of lack of clarity of the final structure of indigenisation. "We all know you can't raise capital when there is no structure and price. If you don't know the structure of something then it's difficult to price it."
He added that the lack of approval had in turn delayed the group's Falgold sweeper on the ZSE.
Saunders noted that Dalny Mine was in fact Chakari meaning that they were responsible for the 1 800 houses in the area. The mine spends $250 000 monthly to supply good and services, "half of the population is not employed by the mine."
"So there is some sort of social relationship there." He added that in fact the group had a special instrument for indigenisation, which will ensure the community gets a certain percentage of turnover.
Saunders said the group was driving an empowerment process at Turk Mine, which will be replicated at all the other mines. The process will be hinged on four main pillars; Sanitation & Health, Water, Land Use and Education.
He added they also had a programme for youth where they would be taken for life building schools.
Saunders said the group was undervalued at around $30 million against just brick and mortar of $68 million for the three main mines. "And this excludes the plant, claim values, reserves, just the brick and mortar."
He said the business if fully capitalised can turn over $300-$400 million a year.
Saunders told an investors tour of Dalny Mine in Chakari that New Dawn Mining had been the first mine in the country to put a 51% indigenisation compliant plan. "We embraced the indigenisation plan because it is the law of the country and it's the only way that we are going to drive a sustainable business in the country."
He added that the issue on indigenisation revolved around the structure and how it was going to be paid for and how it will be developed going forward.
As part of the group's plan for indigenisation, 10% would be taken up by the community at zero cost, 5% will be taken up by employees while 36% will be for New Dawn at entry level. However the plan has not been accepted as acceptable since it was not broad based.
Saunders said as a result, the group had failed to raise the $25-$40 million of capital needed to drive the business to an annualised 100 000oz from the current circa 40 000-50 000oz.
"Unfortunately the delay in getting approvals has had two effects; there has been little or no growth in the business in the last twelve months while the cost base has gone upwards and secondly is that we have not been able to grow lower cost ounces so that the business becomes more fundamental and this has become more dramatic now especially that the gold prices have come down."
Saunders said the group has not been able to raise capital because of lack of clarity of the final structure of indigenisation. "We all know you can't raise capital when there is no structure and price. If you don't know the structure of something then it's difficult to price it."
He added that the lack of approval had in turn delayed the group's Falgold sweeper on the ZSE.
Saunders noted that Dalny Mine was in fact Chakari meaning that they were responsible for the 1 800 houses in the area. The mine spends $250 000 monthly to supply good and services, "half of the population is not employed by the mine."
"So there is some sort of social relationship there." He added that in fact the group had a special instrument for indigenisation, which will ensure the community gets a certain percentage of turnover.
Saunders said the group was driving an empowerment process at Turk Mine, which will be replicated at all the other mines. The process will be hinged on four main pillars; Sanitation & Health, Water, Land Use and Education.
He added they also had a programme for youth where they would be taken for life building schools.
Saunders said the group was undervalued at around $30 million against just brick and mortar of $68 million for the three main mines. "And this excludes the plant, claim values, reserves, just the brick and mortar."
He said the business if fully capitalised can turn over $300-$400 million a year.
Source - Financial Express
