ACR to pay $8m for Falgold's Dalny gold mine

Published: 16 June 2014

AIM-listed resources and development company African Consolidated Resources (ACR) is set to acquire Falgold's mothballed Dalny gold mine for $8 million.

ACR is currently undertaking due diligence on the mine with a view to assuming all the debts and liabilities the non-operational gold producer had accrued.

In a cautionary published today, Falgold said most of the full payment will go towards "various payments".

"This transaction is subject to a full diligence and various actions which ACR is in the process of undertaking. The terms of disposal include: full settlement of all known trade creditors of Dalny Mine; settlement of labour costs of workers; full settlement of any capital gains tax or other tax liabilities due to the Zimbabwe Revenue Authority; the balance of funds after these payments will then be remitted to Falgold.

"ACR have offered a full payment price of $8 000 000 before various payments, as detailed above, need to be made. The estimated net cash from the transaction is approximately $2,5 million," said Falgold.

The disposal of Dalny Mine will constitute a restructuring that will help Falgold meet some of its other capital requirements.

In March this year, the struggling gold producer said it was looking to extend the 25 percent wage cut it effected last year, indicating that it was still in a loss-making position.

The company, which is owned by Toronto Stock Exchange-listed junior miner New Dawn, posted a $12,5 million loss for the year ended September 30 2013 citing poor gold prices, the temporary closure of Dalny Mine and persistent labour issues.

Falgold slashed salaries by 25 percent in October last year initially for three months, citing operational challenges, but further extended the cuts in January and then said the extension would remain indefinitely.

ACR, which recently appointed Zimbabwean Roy Pitchford as it acting CEO, looks to extend its Zimbabwean footprint with the acquisition of Dalny Mine.

The revival of Dalny will come as relief for its 900 worker who were sent on unpaid leave during the third quarter of last year.

ACR is in the process of advancing its flagship asset, the Pickstone-Peerless gold project, after it currently boasted a Joint Ore Reserves Committee-compliant resource of 3,56-million ounces of gold.
- bh24