New Dawn Reports Financial Results for the Quarter Ended March 31, 2011
TORONTO, May 16 /CNW/ --
Quarterly Revenues and Gold Production Levels Reach Record Highs
Net income of $0.02 per share for the quarter ended March 31, 2011,
compared to a net loss of $0.02 per share for the
quarter ended March 31, 2010
Q2 Fiscal 2011 - Quarter Ended March 31, 2011 Highlights
(All amounts are in US dollars)
-- Record consolidated gold sales of US$7.98 million for the
quarter ended March 31, 2011, as compared to gold sales of
US$3.80 million for the quarter ended March 31, 2010
-- Approximately 100% increase in consolidated gold sales for the
quarter ended March 31, 2011, as compared to the quarter ended
March 31, 2010
-- 83.4% increase in consolidated gold production for the quarter
ended March 31, 2011, as compared to the quarter ended March
31, 2010
-- Net income of US$701,573 for the quarter ended March 31, 2011,
as compared a net loss of US$461,372 for the quarter ended
March 31, 2010
-- Adjusted EBITDA of US$1,718,172 for the quarter ended March 31,
2011, as compared adjusted EBITDA of US$1,063,935 for the
quarter ended March 31, 2010, an increase of 61.5%
TORONTO, May 16 /CNW/ - New Dawn Mining Corp. (TSX: ND) ('New Dawn' or the 'Company') announced that its financial results and
corresponding Management's Discussion and Analysis for the quarter
ended March 31, 2011 have now been filed on SEDAR and are also
available to view on the Company's website at www.newdawnmining.com.
The Company prepares its consolidated financial statements in U.S.
Dollars and in accordance with Canadian Generally Accepted Accounting
Principles.
As a result of New Dawn having made an investment in Central African
Gold Plc ('CAG Plc') in June 2010, in which it acquired an 88.7%
controlling interest, New Dawn has consolidated the operations of CAG
for accounting purposes from June 16, 2010. Effective December 31,
2010, CAG Plc was delisted from AIM and effective January 28, 2011, it
was registered as a private company and renamed Central African Gold
Limited ('CAG Ltd'). New Dawn has increased its interest in CAG Ltd to
approximately 96.8% as at May 13, 2011.
Q2 FISCAL 2011 - QUARTER ENDED March 31, 2011 HIGHLIGHTS
Selected unaudited quarterly financial information is presented below.
_____________________________________________________________________
|Fiscal 2011 | Quarters ended |
|____________________________________________|________________________|
| | March 31, |December 31,|
| | 2011 | 2010 |
|____________________________________________|___________|____________|
|Operations | | |
|____________________________________________|___________|____________|
| |Revenue | $7,983,223| $6,458,735|
|_|__________________________________________|___________|____________|
| |Net income for the period ((1)) | 701,573| 96,598|
|_|__________________________________________|___________|____________|
| |Basic and diluted earnings per share ((2))| 0.02| 0.00|
|_|__________________________________________|___________|____________|
| | | |
|____________________________________________|___________|____________|
|Balance sheet | | |
|____________________________________________|___________|____________|
| |Total assets |$50,168,964| $50,437,852|
|_|__________________________________________|___________|____________|
| |Total liabilities | 16,853,860| 17,337,028|
|_|__________________________________________|___________|____________|
| | | |
|____________________________________________|___________|____________|
|Other measures | | |
|____________________________________________|___________|____________|
| |Quantity of gold produced (oz) | 6,226 | 4,808 |
|_|__________________________________________|___________|____________|
| |Quantity of gold sold (oz) | 5,747| 4,715|
|_|__________________________________________|___________|____________|
| |Intercompany loan repayments paid from | | |
| |Zimbabwe | $-| $-|
|_|__________________________________________|___________|____________|
| |Cash costs per oz ((3)) | $799| $821|
|_|__________________________________________|___________|____________|
| |Revenue per oz ((4)) | $1,389| $1,370|
|_|__________________________________________|___________|____________|
| |Adjusted EBITDA ((1)) | $1,718,172| $1,286,691|
|_|__________________________________________|___________|____________|
| | | |
|____________________________________________|___________|____________|
|Attributable ((1)) | | |
|____________________________________________|___________|____________|
| |Revenue | $7,510,160| $6,184,661|
|_|__________________________________________|___________|____________|
| |Quantity of gold produced (oz) | 5,854| 4,577|
|_|__________________________________________|___________|____________|
| |Quantity of gold sold (oz) | 5,406| 4,515|
|_|__________________________________________|___________|____________|
(1) Cash costs per oz, revenue per ounce, Adjusted EBITDA and
Attributable measures are non-GAAP measures and are more fully
described in the discussion at the end of the MD&A entitled
'Non-GAAP Measures.' The calculation of cash costs per oz has been
modified as discussed in the MD&A under 'Non-GAAP Measures'.
(2) Revenue per ounce is calculated by dividing revenue by the ounces
of gold sold.
GOLD SALES
Consolidated gold sales for the quarter ended March 31, 2011 totalled
US$7,983,223, (US$7,510,160 after adjusting for the minority interests'
share of gold sales from the Central African Gold properties) at an
average sales price per ounce of gold of US$1,389, as compared to
US$3,801,780 (US$3,801,780 attributable) for the quarter ended March
31, 2010 at an average sales price per ounce of gold of US$1,109, an
increase in revenue of 110.0% (97.5% increase on an attributable
basis).
Consolidated gold sales for the quarter ended March 31, 2011 increased
by 23.6% (21.4% increase on an attributable basis), as compared to gold
sales for the previous quarter ended December 31, 2010 of US$6,458,735
(US$6,184,661 attributable) at an average sales price per ounce of gold
of US$1,370.
100% of sale proceeds were received in US dollars.
GOLD PRODUCTION
Gold sales reached record levels as New Dawn reported increased
consolidated gold production of 6,226 ounces of gold produced (5,854
ounces attributable to New Dawn, after adjusting for the minority
interests' share of gold production from the Central African Gold
properties) for the quarter ended March 31, 2011, as compared to 3,395
ounces of gold produced (3,395 ounces attributable) for the quarter
ended March 31, 2010, an increase of 83.4% (72.4% increase on an
attributable basis).
As compared to the production output of 4,808 ounces of gold produced
(4,577 ounces attributable) for the previous quarter ended December 31,
2010, consolidated gold production for the quarter ended March 31, 2011
increased by 29.5% (27.9% increase on an attributable basis, after
adjusting for the minority interests' share of gold production from the
Central African Gold properties).
The increase in gold production was a result of greater tonnage mined
and processed at the Turk Mine, as well as an increase in production
output from the Central African Gold properties. During the quarter
ended March 31, 2011, production output increased at both the Dalny and
Old Nic Mines and, collectively, these mines contributed 2,200 ounces
(1,828 ounces attributable) to New Dawn's total production output for
the quarter ended March 31, 2011. The Dalny and Old Nic Mines are
expected to contribute an increasing proportion of New Dawn's
consolidated gold production in future periods.
New Dawn's 100% owned Turk Mine produced 4,026 ounces of gold during the
quarter ended March 31, 2011, as compared to 3,395 ounces of gold
during the quarter ended March 31, 2010, an increase of 18.6%. Gold
production at the Turk Mine for the quarter ended March 31, 2011
increased by 10.2%, to 4,026 ounces of gold, as compared to gold
production for the previous quarter ended December 31, 2010 of 3,654
ounces of gold.
The Turk, Old Nic and Dalny Mines all experienced an increase in gold
production in line with management's operating plan to reach a
consolidated production run rate of 38,000 to 40,000 ounces of
annualized gold production by December 2011.
CASH COSTS
Average cash costs per ounce of gold produced for all mines were US$799
for the quarter ended March 31, 2011, as compared to US$821 for the
quarter ended December 31, 2010, and as compared to US$614 for the
quarter ended March 31, 2010.
During the quarter ended December 31, 2010, mining operations,
particularly at Turk Mine, suffered as a result of the increasingly
unreliable and deteriorating power supply that resulted in significant
unscheduled down time. With the continuous power contract in place and
full power available throughout the quarter ended March 31, 2011, this
constraint on operations was eliminated. With an increasing gold price
and a stable power supply, the mine cut-off grade was reduced, thus
lowering the grade of the ore processed by the mill. The decision with
respect to the appropriate cut-off grade requires management to balance
the objectives of both efficient mine operation and meeting revenue and
cash flow targets, with the objective to maintain or improve the gross
operating margin. Management periodically reviews and reassesses this
operating metric.
Both the Dalny and Old Nic Mines significantly improved their production
volumes during the quarter ended March 31, 2011, in part as a result of
their refurbished and updated mining facilities, thus increasing the
quantity over which their fixed costs are allocated. As a result, with
respect to cash costs per ounce of gold produced during the quarter
ended March 31, 2011, the Old Nic Mine experienced a 23.0% improvement
and the Dalny Mine experienced a 25.6% improvement.
NET INCOME AND ADJUSTED EBITDA
For the quarter ended March 31, 2011, New Dawn reported quarterly
consolidated net income of US$701,573, as compared a net loss of
US$461,372 for the quarter ended March 31, 2010.
For the quarter ended March 31, 2011, New Dawn reported adjusted EBITDA
of US$1,718,172, as compared adjusted EBITDA for the quarter ended
March 31, 2010 of US$1,063,935.
With record gold sales and production levels, both net income and
adjusted EBITDA improved on a period to period comparison.
Management anticipates a reduction in corporate overhead costs in future
periods to more normalized levels, as the CAG Ltd restructuring, which
is nearing finalization, will allow for significant cost reductions.
Management also expects that mining and processing operations should
reflect increasing efficiencies from economies of scale as production
levels increase.
ASSETS AND LIABILITIES
The Company's working capital (current assets minus current liabilities)
at March 31, 2011 amounted to $7,443,961, as compared to $1,289,330 at
September 30, 2010. The increase in working capital during the six
months ended March 31, 2011 was primarily attributable to a private
placement of common stock for proceeds of $7,436,372 to several funds
managed by an international investment firm based in the UK at CAN$1.80
per share completed in November 2010.
As at March 31, 2011, the Company has no funded long-term debt
obligations.
As at March 31, 2011, the Company has other non-current liabilities of
$12,143,487, as compared to $11,639,705 at September 30, 2010. These
liabilities consist of future income tax liability and mine reclamation
and closure costs obligation. The future income tax liability will
become payable when the Company's ongoing investment in property, plant
and equipment decreases such that depreciation expense exceeds the
amount deductible for income tax purposes. The mine reclamation and
closure costs obligation, also known as asset retirement obligation, is
the charge to date that operations have borne in respect of the
estimated cost of rehabilitating mining sites in the future when the
mines ultimately cease operations. As the estimated mine life for the
Company's various mines ranges from 12 to 30 years, management does not
anticipate that this liability will require any significant cash
outflows for the next several years.
INDIGENISATION
As previously reported, the Government of Zimbabwe is in the process of
implementing an indigenisation policy wherein all domestic businesses
are to be 51% owned by indigenous Zimbabweans. New Dawn's Zimbabwe
operating subsidiaries, Casmyn Mining Zimbabwe (Private) Limited,
Falcon Gold Zimbabwe Limited and Olympus Mines Limited, are all
non-indigenous companies for purposes of the Indigenisation and
Economic Empowerment Act that was signed into law on March 9, 2008, and
the related Regulations that were gazetted as Statutory Instrument 21
of 2010 issued on January 29, 2010. A General Notice issued on March
25, 2011 stipulated that each non-indigenous mining company must submit
an indigenisation implementation plan by May 9, 2011 and dispose of
51%, less any percentage previously indigenised to qualified indigenous
Zimbabwean companies or investors, of its shares to a 'designated
entity' by September 25, 2011, which may, in certain circumstances, be
extended by a further period of no more than three months. In this
regard, New Dawn filed its Indigenisation Implementation Plan (the
'Plan') with the Government of Zimbabwe on a timely basis.
New Dawn believes that its Plan addresses the requirements of the
legislation, and includes engaging directly with indigenous capital
partners in Zimbabwe, such as pension funds and investment firms that
qualify as indigenous investors. Additionally, as part of its Plan,
the Company is proposing to list its common stock on the Zimbabwe Stock
Exchange (in addition to maintaining its primary listing on the Toronto
Stock Exchange), in conjunction with a secondary offering of its common
stock to indigenous investors in Zimbabwe. The Plan also anticipates
the establishment of employee and community share ownership plans for
the benefit of indigenous Zimbabweans that are intended to provide the
opportunity for broad-based participation by indigenous Zimbabweans.
New Dawn is continuing to engage in confidential discussions with the
Government of Zimbabwe in an effort to reach agreement about the terms,
conditions and timing of an indigenisation program based on the
previously submitted Plan that will be compliant with applicable legal
requirements. Upon reaching agreement with the Government of Zimbabwe,
the Company expects to move expeditiously to implement its Plan. The
Company will provide further information to shareholders as and when
such discussions have been concluded, or when developments otherwise
warrant. As of May 13, 2011, the Company has not received any response
to the Plan that it has submitted to the Government of Zimbabwe.
There is currently substantial uncertainty surrounding the
implementation of the recent indigenisation regulations and their
potential impact on the Company. There can be no assurances that the
Company will be successful in its efforts to comply with the
indigenisation laws and regulations. Accordingly, if the Company is
unable to obtain approval of the Government of Zimbabwe for its Plan
(or amend the Plan in a commercially reasonable manner that is
satisfactory to the Government of Zimbabwe), the Company could be
required to transfer 51% of each of its Zimbabwe subsidiaries to a
'designated entity' with payment uncertain, which would raise
significant implications as to the Company's ability to continue to
conduct its operations in Zimbabwe, as well as to obtain the funding
necessary to continue to implement its current business plan.
Upon successful acceptance by the Government of Zimbabwe and
implementation of New Dawn's Plan, the Company believes it would then
have the additional working capital resources necessary to support its
efforts to increase gold production to 100,000 ounces of gold on an
annualized basis within the next four to five years.
ABOUT NEW DAWN
New Dawn is a Zimbabwe-focused junior gold company that is currently
expanding its consolidated gold production to 50,000 to 60,000 ounces
of gold within the next 18 to 24 months. New Dawn targets further
increasing gold production to 100,000 ounces of annualized gold
production within the next four to five years. New Dawn owns 100% of
the Turk/Angelus Mine Complex in Zimbabwe. New Dawn also owns a
controlling interest in Central African Gold Limited ('CAG Ltd'),
through its acquisition of an 88.7% controlling interest in CAG Ltd in
June 2010 (subsequently increased to approximately 96.8%). CAG Ltd
owns substantial gold mining assets and operations in Zimbabwe, as well
as extensive prospective acreage. In total, New Dawn operates three
significant gold camps in Zimbabwe containing six mines, three of which
are currently producing gold and are in the process of expanding
production. One additional mine is currently in the process of being
brought back into production.
As the Turk Mine and the adjacent Angelus Mine are now interlinked on
several levels underground, management no longer considers it feasible
to separate the two mining projects. Accordingly, they are now being
treated for both operational and management purposes as one contiguous
mining property, referred to as the Turk/Angelus Mine Complex. The Turk
Mine is in production, and exploration work is continuing on the
Angelus Mine.
Additionally, New Dawn, with its first mover advantage, is actively
exploring on highly prospective ground employing modern exploration
techniques and deploying capital in Zimbabwe, a country that is proven
to be geologically rich, highly prospective, and significantly under
explored.
New Dawn, with its large gold resource, existing production facilities
and current exploration efforts, is well on the path to becoming a
junior leading and then mid-tier gold mining company in Zimbabwe,
active in both gold production and gold exploration.
Information on New Dawn's gold reserve and resource estimates is
included at the Company's website at www.newdawnmining.com or in the Company's filings on SEDAR at www.sedar.com.
The TSX has not reviewed and does not accept responsibility for the
adequacy or the accuracy of this release. Statements in this press
release regarding the Company's business which are not historical facts
are 'forward-looking statements' that involve risks and uncertainties,
such as estimates and statements that describe the Company's future
plans, objectives or goals, including words to the effect that the
Company or management expects a stated condition or result to occur.
Since forward-looking statements address future events and conditions,
by their very nature, they involve inherent risks and uncertainties.
Actual results in each case could differ materially from those
currently anticipated in such statements.
The contents of this news release were supervised and reviewed by Ian R.
Saunders, B.Sc., who is President, Chief Executive Officer, and a
Director of New Dawn Mining Corp., and who is a Qualified Person within
the meaning of NI 43-101.
Special Note Regarding Forward-Looking Statements: Certain statements included or incorporated by reference in this news
release, including information as to the future financial or operating
performance of the Company, its subsidiaries and its projects,
constitute forward-looking statements. The words 'believe,' 'expect,'
'anticipate,' 'contemplate,' 'target,' 'plan,' 'intends,' 'continue,'
'budget,' 'estimate,' 'may,' 'schedule' and similar expressions
identify forward-looking statements. Forward-looking statements
include, among other things, statements regarding targets, estimates
and assumptions in respect of gold production and prices, operating
costs, results and capital expenditures, mineral reserves and mineral
resources and anticipated grades and recovery rates. Forward-looking
statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by the Company, are
inherently subject to significant business, economic, competitive,
political and social uncertainties and contingencies. Many factors
could cause the Company's actual results to differ materially from
those expressed or implied in any forward-looking statements made by,
or on behalf of, the Company. Such factors include, among others,
risks relating to reserve and resource estimates, gold prices,
exploration, development and operating risks, political and foreign
risk, uninsurable risks, competition, limited mining operations,
production risks, environmental regulation and liability, government
regulation, currency fluctuations, recent losses and write-downs and
dependence on key employees. See 'Risk Factors' in the Company's
Annual Information Form - 2010. Due to risks and uncertainties,
including the risks and uncertainties identified above, actual events
may differ materially from current expectations. Investors are
cautioned that forward-looking statements are not guarantees of future
performance and, accordingly, investors are cautioned not to put undue
reliance on forward-looking statements due to the inherent uncertainty
therein. Forward-looking statements are made as of the date of this
press release and the Company disclaims any intent or obligation to
update publicly such forward-looking statements, whether as a result of
new information, future events or results or otherwise.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/May2011/16/c4988.html
Investor Relations Contact: Richard Buzbuzian 1 416.585.7890
President and Chief Executive Officer: Ian R. Saunders 1 416.585.7890
Visit us on the internet: http://www.newdawnmining.com or
Email us at: info@newdawnmining.com