New Dawn Reports Financial Results for the Quarter Ended June 30, 2011
TORONTO, Aug. 11, 2011 /CNW/ --
Record Quarterly Revenues and Gold Production
Net income of $0.02 per share for the quarter ended June 30, 2011, as
compared to a loss of $0.00 per share for the quarter ended June 30, 2010
Q3 FISCAL 2011 - QUARTER ENDED JUNE 30, 2011 HIGHLIGHTS
(All amounts are in US dollars)
-- Record consolidated gold sales of US$9.79 million for the
quarter ended June 30, 2011, as compared to consolidated gold
sales of US$3.55 million for the quarter ended June 30, 2010
-- 176% increase in consolidated gold sales for the quarter ended
June 30, 2011, as compared to the quarter ended June 30, 2010
-- 111% increase in consolidated gold production for the quarter
ended June 30, 2011, as compared to the quarter ended June 30,
2010
-- Net income of US$852,301 for the quarter ended June 30, 2011,
as compared to a net loss of US$150,969 for the quarter ended
June 30, 2010
-- Adjusted EBITDA of US$2,060,512 for the quarter ended June 30,
2011, as compared to Adjusted EBITDA of US$380,702 for the
quarter ended June 30, 2010, an increase of 441%
TORONTO, Aug. 11, 2011 /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 June 30, 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.
New Dawn acquired an 88.7% controlling interest in Central African Gold
('CAG') effective June 16, 2010, as a result of which New Dawn has
consolidated the operations of CAG for accounting purposes since that
date. Subsequently, New Dawn increased its ownership interest in CAG
from the initial 88.7% at June 16, 2010 to 100% by early June 2011.
Accordingly, at June 30, 2011, CAG was a wholly-owned subsidiary of New
Dawn.
Q3 FISCAL 2011 - QUARTER ENDED JUNE 30, 2011 HIGHLIGHTS
Selected unaudited quarterly financial information is presented below.
_____________________________________________________________________
|Fiscal 2011 | Quarters ended |
|__________________|__________________________________________________|
| | June 30, | March 31, | December 31, |
| | 2011 | 2011 | 2010 |
|__________________|_________________|_________________|______________|
|Operations | | | |
|__________________|_________________|_________________|______________|
| Revenue | $9,791,973 | $7,983,223 | $6,458,735 |
|__________________|_________________|_________________|______________|
| Net income for| | | |
|the period ((1)) | 852,301| 701,573| 96,598|
|__________________|_________________|_________________|______________|
| Basic and | | | |
|diluted earnings | | | |
|per share | 0.02| 0.02| 0.00|
|__________________|_________________|_________________|______________|
| Weighted | | | |
|average common | | | |
|shares outstanding| | | |
|- | | | |
|__________________|_________________|_________________|______________|
| Basic | 42,204,843| 42,204,843| 40,706,123|
|__________________|_________________|_________________|______________|
| Diluted | 43,315,087| 43,471,432| 41,512,819|
|__________________|_________________|_________________|______________|
| | | | |
|__________________|_________________|_________________|______________|
|Balance sheet | | | |
|__________________|_________________|_________________|______________|
| Total assets | $55,765,661| $50,168,964| $50,437,852|
|__________________|_________________|_________________|______________|
| Total | | | |
|liabilities | 21,909,750| 16,853,860| 17,337,028|
|__________________|_________________|_________________|______________|
| | | | |
|__________________|_________________|_________________|______________|
|Other measures | | | |
|__________________|_________________|_________________|______________|
| Quantity of | | | |
|gold produced (oz)| 6,841 | 6,226 | 4,808 |
|__________________|_________________|_________________|______________|
| Quantity of | | | |
|gold sold (oz) | 6,458| 5,747| 4,715|
|__________________|_________________|_________________|______________|
| Intercompany | | | |
|loan repayments | | | |
|paid from Zimbabwe| $-| $-| $-|
|__________________|_________________|_________________|______________|
| Cash costs per| | | |
|oz ((1)) | $1,024((3))| $799| $821|
|__________________|_________________|_________________|______________|
| Revenue per oz| | | |
|((2)) | $1,516| $1,389| $1,370|
|__________________|_________________|_________________|______________|
| Adjusted | | | |
|EBITDA ((1)) | $2,060,512| $1,718,172| $1,286,691|
|__________________|_________________|_________________|______________|
| | | | |
|__________________|_________________|_________________|______________|
|Attributable ((1))| | | |
|__________________|_________________|_________________|______________|
| Revenue | $9,197,031| $7,510,160| $6,184,661|
|__________________|_________________|_________________|______________|
| Quantity of | | | |
|gold produced (oz)| 6,355| 5,854| 4,577 |
|__________________|_________________|_________________|______________|
| Quantity of | | | |
|gold sold (oz) | 6,067| 5,406| 4,515|
|__________________|_________________|_________________|______________|
(1) Cash costs per ounce, revenue per ounce, and Adjusted EBITDA
and Attributable measures are non-GAAP measures and are more
fully described in the discussion at the end of Management's
Discussion and Analysis entitled 'Non-GAAP Measures'. The
calculation of cash costs per ounce has been modified as
discussed under 'Non-GAAP Measures'.
(2) Revenue per ounce is calculated by dividing the revenue by the
ounces of gold sold.
(3) Cash costs during the quarter ended June 30, 2011 were
adversely affected by various operating issues, including
certain anomalous issues at Turk Mine (see discussion below at
'CASH COSTS').
GOLD SALES
Consolidated gold sales for the quarter ended June 30, 2011 totalled
US$9,791,973 (US$9,197,031 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$1,516, as compared to
consolidated gold sales of US$3,549,786 (US$3,549,786 attributable) for
the quarter ended June 30, 2010 at an average sales price per ounce of
gold of US$1,194, an increase of 176% (159% increase on an attributable
basis).
As compared to consolidated gold sales for the previous quarter ended
March 31, 2011 of US$7,983,223 (US$7,510,160 attributable),
consolidated gold sales for the quarter ended June 30, 2011 increased
by 22.7% (22.5% increase on an attributable basis).
100% of sale proceeds were received in US dollars.
At June 30, 2011, included in inventories was an additional 1,847 ounces
of gold awaiting sale, all of which will be included in July 2011
sales.
GOLD PRODUCTION
Gold production reached record levels as New Dawn reported consolidated
gold production of 6,841 ounces of gold produced (6,355 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 June 30, 2011, as compared to 3,243 ounces of gold
produced (3,243 ounces attributable) for the quarter ended June 30,
2010, an increase of 111% (96% increase on an attributable basis).
As compared to the consolidated production output for the previous
quarter ended March 31, 2011 of 6,226 ounces of gold produced (5,854
ounces attributable), consolidated gold production for the quarter
ended June 30, 2011 increased by 9.9% (8.6% increase on an attributable
basis).
The increase in gold production was a result of greater tonnage mined
and processed at the Central African Gold properties. During the
quarter ended June 30, 2011, production output increased at both Dalny
and Old Nic Mines, and was augmented by the output from Golden Quarry
Mine, which started production in May 2011. Collectively, these mines
contributed 3,453 ounces (2,967 ounces attributable) to New Dawn's
total production output for the quarter ended June 30, 2011. The
Dalny, Old Nic and Golden Quarry Mines are expected to contribute an
increasing proportion of New Dawn's consolidated gold production in
future periods.
Consolidated gold production for the quarter ended June 30, 2011
increased to an annualized run rate of approximately 27,000 ounces,
confirming that the 38,000 to 40,000 ounces of annualized gold
production by December 2011 is an achievable target.
CASH COSTS
Average cash costs per ounce of gold produced are determined, in part,
by the decision with respect to the appropriate cut-off grades for each
mine, which 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 operating gross margin.
Grade, tonnage and production costs are evaluated in this process, both
on an individual basis and on their collective impact on other
operating metrics. Management periodically reviews and reassesses this
operating metric and revises its plans accordingly.
Operating results at Turk Mine during the quarter ended June 30, 2011
were negatively impacted by a reduction in the cut-off grade
implemented early in the quarter in conjunction with a modified and
updated mine plan, which was subsequently increased later in the
quarter. As a result of these issues, production at Turk Mine during
the quarter ended June 30, 2011 was reduced by 638 ounces or 16%, as
compared to the quarter ended March 31, 2011, with higher than normal
cash costs per ounce. Because Turk Mine represented almost 50% of the
gold produced by the Company for the quarter ended June 30, 2011, the
effect of these difficulties had a disproportionate effect on average
cash costs per ounce during the period. These issues have been
corrected, and production at Turk Mine returned to normal levels at
June 30, 2011.
Both the Dalny and Old Nic Mines significantly improved their production
output during the quarter ended June 30, 2011, in part as a result of
their refurbished and updated mining facilities. Although Old Nic
Mine incurred a reduction in cash costs during the quarter, cash costs
at Dalny Mine increased during the quarter as a result of the
resumption of underground operations. Cash costs at Dalny Mine are
expected to normalize at lower levels as underground mining progresses.
Production at Dalny and Old Nic Mines was augmented by the resumption of
operations at Golden Quarry Mine in May 2011, which also had an impact
on cash costs per ounce during the quarter ended June 30, 2011, as the
resumption of operations resulted in operating inefficiencies upon
start-up that normalize over time.
Cash costs were also negatively impacted during the quarter ended June
30, 2011 by a 21% increase in power costs and by seven public holidays.
As a result of the aforementioned factors, average cash costs per ounce
of gold produced for all mines were US$1,024 per ounce for the quarter
ended June 30, 2011, as compared to US$799 for the quarter ended March
31, 2011, and US$821 for the quarter ended December 31, 2010.
NET INCOME AND ADJUSTED EBITDA
For the quarter ended June 30, 2011, New Dawn reported consolidated net
income of US$852,301, as compared a consolidated net loss of US$150,969
for the quarter ended June 30, 2010.
For the quarter ended June 30, 2011, New Dawn reported Adjusted EBITDA
of US$2,060,512, as compared Adjusted EBITDA of US$380,702 for the
quarter ended June 30, 2010.
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 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 June 30, 2011 amounted to $5,290,513, as compared to $1,289,330 at
September 30, 2010. The increase in working capital was mainly
attributable to the November 2010 equity financing which generated net
proceeds of $7,436,372. Also impacting the Company's working capital
was a short-term loan arranged in May 2011, the proceeds of which have
been utilized to fund the continuing development of the Company's
mining operations and capital infrastructure, in particular, deposits
towards the installation of an ultra fine grind mill and other capital
projects.
At June 30, 2011, the Company has no funded long-term debt obligations.
At June 30, 2011, the Company has other non-current liabilities of
$14,529,040, as compared to $11,639,705 at September 30, 2010. These
non-current liabilities consist of future income tax liability and mine
reclamation and closure costs obligation. The increase in the future
income tax liability relates to the acquisition of the assets held by
CAG and its subsidiaries that have been valued at fair value as at the
date of the acquisition in June 2010 in accordance with accounting
requirements. 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. Based on current operating plans, the Company
does not anticipate that any of this amount will become payable in the
foreseeable future. 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 Zimbabwe Government 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 Gold Mines Limited, are all
non-indigenous companies for the 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.
New Dawn believes that its Indigenisation Plan (the 'Plan'), filed in
late April 2011 and amended in June 2011, addresses the requirements of
the legislation and includes a number of appropriate initiatives to
meet the 51% indigenous Zimbabwean shareholder requirement.
There is currently substantial uncertainty surrounding the
implementation of the indigenisation legislation and the potential
impact on the Company. There can be no assurance that the Company will
be successful in its effort to comply with the indigenisation
legislation. 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.
Although management is of the opinion that the Plan meets the
requirements of the legislation, there can be no assurances that it
will be accepted by the Minister of Youth Development, Indigenisation
and Empowerment. Confidential discussions with officials of the
Ministry of Youth Development, Indigenisation and Empowerment and other
representatives of the Government of Zimbabwe are ongoing. The Company
will provide further information to shareholders as and when such
discussions have been concluded, or when developments otherwise
warrant.
Subject to acceptance by the Government of Zimbabwe and successful
implementation of New Dawn's Plan (as may be modified by mutual
agreement), 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 by the
end of 2014.
ABOUT NEW DAWN
New Dawn is a Zimbabwe-focused junior gold company that is currently
implementing its plan to expand its consolidated annualized gold
production to 38,000 to 40,000 ounces by the end of 2011, and then to
an expected 50,000 to 60,000 ounces by the end of 2012. New Dawn
targets further increasing annualized gold production to 100,000 ounces
by the end of 2014.
New Dawn owns 100% of the Turk/Angelus Mine Complex, the Old Nic Mine
and the Camperdown Project. In addition, New Dawn has an approximately
85% equity interest in the Dalny, Golden Quarry and Venice Mines, and a
large portfolio of prospective exploration acreage in Zimbabwe. These
six mines, four of which are now operational, are divided into three
significant gold camps, and the Company is in the process of expanding
production at these sites. All properties and exploration projects are
located in Zimbabwe.
In addition to gold production, New Dawn is also 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
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 Toronto Stock Exchange 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, indigenisation 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/August2011/11/c3331.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