New Dawn Reports Fiscal Year 2012 Results

FINANCIAL HIGHLIGHTS

Fiscal Year Ended September 30, 2012

• $61.9 million in revenues from gold sales ($56.6 million attributable)
• $2.3 million of net income allocable to common shareholders - $0.05 per common share (basic and diluted)
• $7.3 million Adjusted EBITDA
• 37,623 ounces of gold produced (34,397 ounces attributable)

Fiscal 4^th Quarter Ended September 30, 2012

• $16.5 million in revenues from gold sales ($15.1 million attributable)
• $0.5 million net loss allocable to common shareholders - $(0.01) per common share (basic and diluted)
• $0.7 million Adjusted EBITDA
• 10,256 ounces of gold produced (9,370 ounces attributable)

TORONTO, Dec. 20, 2012 /CNW/ - New Dawn Mining Corp. (TSX: ND) ("New Dawn" or the "Company"), a junior gold company focused on developing its gold mining assets and operations in Zimbabwe, announced that its financial results and corresponding Management's Discussion and Analysis for the year ended September 30, 2012 have now been filed on SEDAR at www.sedar.com and are also available for viewing on the Company's web-site at www.newdawnmining.com.

Unless otherwise indicated, all amounts presented herein are in United States dollars.

NEW DAWN OPERATIONAL OVERVIEW

As a result of increasing production and strong gold prices, the Company reported increased sales revenue for both the year and quarter ended September 30, 2012 compared to the year and quarter ended September 30, 2011.  However, continuing cost pressures and certain operational challenges, including the effects of a reassessment of the geological model at the Turk and Angelus Mine and the slower than planned transition from processing low grade tailings sands to accessing higher grade underground mineralised material at Dalny Mine, combined to cause production inefficiencies and resulted in reduced net income for fiscal 2012 as compared to fiscal 2011, as well as a small net loss reported for the quarter ended September 30, 2012.

In response to these operational issues and other external factors, and with the completion of the Company's current expansion plans, the Company has recently revised its overall near-term operating strategy to a more steady-state production model.  This change in approach will provide additional time in fiscal 2013 for the Company to continue to address the operational issues encountered at its various operations.  As the Company expects implementation of this change to take several months, the results for the quarter ending December 31, 2012 are likely to be similar to those for the quarter ended September 30, 2012.

The Company continued to implement its growth strategy during the fiscal year ended September 30, 2012, completing a number of plant and infrastructure expansion projects, all financed primarily from internally generated cash.  The 2012 fiscal year saw the completion and successful commissioning of the Deswick mill at Turk and Angelus Mine, as well as plant expansion at both Golden Quarry and Dalny Mine.  In addition, access was gained to the lower levels of Dalny Mine as dewatering passed 18 level, with the result that underground mineralised material at that location is now being processed.  The Company has now completed essentially all of the improvements that can be reasonably financed from operational cash flow.  The next phase of development will be implemented once appropriate funding can be arranged, which will likely be when the indigenisation process has been finalised.

Further development of the Company's mining operations and exploration programs is premised, in substantial part, on access to adequate debt and/or equity financing, as well as finalisation and implementation of the Company's Plan of Indigenisation, as discussed below at "Indigenisation".  The Company's operations and development plans could also be impacted by various other factors, including, for example, the world price of gold, taxes and royalties, mining fees, power and labour costs, the Zimbabwe operating environment, and potential changes to environmental regulations in Zimbabwe, which could impact operations and the Company's capital requirements.

SELECTED FINANCIAL INFORMATION

This selected financial information should be read in conjunction with the Company's consolidated financial statements, including the notes thereto, for the periods referenced.

Annual Results

The following table sets forth selected consolidated financial and other information for the Company for the years ended September 30, 2012, 2011 and 2010, prepared in United States dollars.

Quarterly Results (Unaudited)

The following table sets forth selected consolidated financial and other information for the Company for the quarter ended September 30, 2012, as compared to both the immediately preceding quarter ended June 30, 2012, and to the quarter ended September 30, 2011. Financial information included in this table has been prepared under IFRS.

Non-IFRS Measures

The Company has included herein certain performance measures that are not recognized accounting measures under IFRS, specifically, Adjusted EBITDA, Cash Costs per Ounce, and Attributable measures. These non-IFRS performance measures do not have any standardised meaning prescribed by IFRS and, therefore, are not necessarily comparable to similar measures presented by other companies. However, the Company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors may find this information useful in their evaluation of the Company's performance.  Accordingly, these non-IFRS measures are intended to provide additional information and they should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Total and Attributable Ounces

Total ounces represent the total ounces that are under the control of the Company and its subsidiaries.  This measure is consistent with the method of consolidation used to prepare the Company's consolidated financial statements.

Attributable ounces are the ounces calculated on the basis of the Company's proportionate ownership of its subsidiaries, thereby removing the minority interests' notional allocation of ounces from total ounces.  Accordingly, attributable ounces and any financial information based on attributable ounces are non-IFRS based measures.

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")

Earnings before interest expense (net of interest income), income taxes, and depreciation and amortization ("EBITDA") is a metric that is used by some investors to measure the cash earning capacity of a company's business operations without the distortion arising from both varying capital structures and different tax legislations that apply in different jurisdictions.  EBITDA is different from cash flow from operations appearing in the consolidated statement of cash flows in that it does not take into account net interest expense and tax payments or changes in non-cash working capital.  It is also different from free cash flow in that it excludes the cash required to replace capital assets.

As EBITDA is used by some investors as a surrogate or supplemental cash earnings metric, the Company further adjusts EBITDA by eliminating the impact of impairment expense (net of impairment recoveries), stock-based compensation expense, and any gain or loss from the change in fair value of warrants ("Adjusted EBITDA").  During the year ended September 30, 2012, the Company revised Adjusted EBITDA to remove overhead from non-operational properties from the current period calculation and all comparative periods.

Cash Costs per Ounce

The Company calculates this metric from mining and processing costs reported in its statement of income and comprehensive income, excludes royalties and levies, and adjusts for the change in production activity.

Additional information on these measures and their calculation is included in the Company's Management's Discussion and Analysis for the quarter and year ended September 30, 2012 filed on SEDAR (www.sedar.com) and available for viewing on the Company's web-site (www.newdawnmining.com).

REVIEW OF FINANCIAL RESULTS

Gold Production

Production for the fiscal year ended September 30, 2012 increased significantly to 37,623 ounces, an increase of 10,934 ounces or 41%, as compared to 26,689 ounces for the fiscal year ended September 30, 2011, reflecting the result of the acquisition of the Central African Gold mining assets in June 2010 and the investment of over $20 million over the past two years to upgrade and expand infrastructure and plant capacity.

Quarterly production increased to 10,256 ounces for the quarter ended September 30, 2012, as compared to 9,536 ounces for the quarter ended June 30, 2012, and as compared to 8,814 ounces for the quarter ended September 30, 2011.

Gold Sales

Revenue from gold sales for the fiscal year ended September 30, 2012 was $61,947,433, an increase of $23,653,763 or 61.8%, as compared to revenue from gold sales for the fiscal year ended September 30, 2011 of $38,293,670, as a result of the increased production and a strengthening of the gold price, with the increase in the quantity of gold sold accounting for 85.7% of the revenue increase.

Revenue from gold sales for the quarter ended September 30, 2012 was $16,486,612, an increase of $2,426,873 or 17.3%, as compared to revenue from gold sales for the quarter ended September 30, 2011 of $14,059,739.

Cash Costs per Ounce

The higher than normal cash costs per ounce for gold produced during the years ended September 30, 2012 and 2011 have been caused by several factors.  At the Turk and Angelus Mine, unexpectedly poor results from drilling and production data in 2012 caused an extensive review of the geological structure, resulting in the adoption of a different geological and mine development model.  The application of this model to the mine plan required several months, during which period the processing plant was operating at a sub-optimal level, thereby negatively impacting results.  In addition, at Dalny Mine, the transition from low grade tailings sands to underground operations, which provide higher grade mineralised material, was delayed, thereby also reducing the anticipated quantity of gold produced.  With lower gold production, the operating costs, which are mainly fixed, are allocated over a smaller quantity of gold, thus negatively impacting cash costs. Other factors impacting cash costs per ounce included a hoist breakdown, a short illegal strike and electrical supply problems at Dalny and Old Nic Mines, as well as escalating raw material prices, particularly cyanide, and a 10% increase in base labor costs during 2012.

With the Company's short-term focus changing to stabilising production with the currently installed plant and infrastructure, the Company is working to improve its efficiencies and processes.  To offset the decreasing economic benefit of continuing to process the on-site low grade tailings sands at Dalny Mine, the Company has begun to test new sources of raw material for the Dalny processing plant.  The results of this testing are still being compiled.  However, production during October 2012 has been negatively impacted by a transformer overload at Dalny Mine that halted production for several days and restricted operations for approximately three weeks; full production capability was restored once replacement equipment had been received and installed.  Similar problems have recurred at Dalny Mine in mid-December 2012.

Net Income Allocable to Common Shareholders

Net income allocable to common shareholders was $2,304,551 for the year ended September 30, 2012 ($0.05 per share, basic and diluted), as compared to $4,297,685 for the year ended September 30, 2011 ($0.10 per share, basic and diluted), a decrease of $1,993,134 or 46.4%.  For the reasons discussed above, net income in fiscal 2012 was negatively impacted by the anomalous operating costs incurred in the mining and processing of mineralised material during such fiscal year.

Adjusted EBITDA

Adjusted EBITDA for the year ended September 30, 2012 was $7,217,182, as compared to $7,323,521 for the fiscal year ended September 30, 2011, despite net income allocable to common shareholders for 2012 being substantially less than for 2011.

OPERATING IN ZIMBABWE

Contributions to the Zimbabwe Economy

The Company mining operations in Zimbabwe have contributed to the Zimbabwe economy in various ways as follows:

• Five mines currently operating in Zimbabwe.
• Payments in respect of royalties, taxes, license fees, levies and other amounts to the Government of Zimbabwe and various local authorities amounted to $10,439,985 for the year ended September 30, 2012, equal to 16.8% of the Company's gross revenues, while net income allocable to common shareholders and non-controlling interests was only $2,860,551 for the same period.
• The Company has grown its workforce at its various mine sites in Zimbabwe by 1,127 workers or 66.6% during the past two years, from 1,691 employees at September 30, 2010 to 2,818 employees at September 30, 2012.
• The Company has invested in excess of $13 million in its Zimbabwe operations during the year ended September 30, 2012.
• The Company has invested in excess of $23 million in its Zimbabwe operations during the past two years.
• The Company sources a majority of its operational supplies and services from local Zimbabwean businesses.
• The Company contributes materially to the health, education, welfare and support of the people in the villages around the Company's mine sites.
  
  

The finalisation and implementation of the Company's Plan of Indigenisation and the potential funding from indigenous investor groups are expected to provide New Dawn with access to additional capital resources to support its efforts to increase sustainable gold production from its properties in Zimbabwe, thus expanding its employee base and contributing to the overall growth and development of the Zimbabwe economy.

Indigenisation

The Government of Zimbabwe is in the process of implementing an indigenisation policy wherein all domestic businesses are required to be 51% beneficially owned and controlled by indigenous Zimbabweans.  New Dawn's Zimbabwe operating subsidiaries, Casmyn Mining Zimbabwe (Private) Limited, Falcon Gold Zimbabwe Limited ("Falgold") and Olympus Gold Mines Limited, are all currently non-indigenous under the indigenisation legislation and the related regulations.

New Dawn's Plan of Indigenisation was designed and structured to accomplish compliance with the requirement for 51% ownership by indigenous Zimbabweans, while also taking into account the interests of other key stakeholder groups.  The Company's initial Plan of Indigenisation was timely filed with the Zimbabwe Ministry of Youth Development, Indigenisation and Economic Empowerment (the "Ministry") in April 2011. Since then, the Company has been in confidential discussions and meetings with the Ministry and the National Indigenisation and Economic Empowerment Board ("NIEEB") addressing not only the components of the Company's Plan of Indigenisation but also its proposed participants.

New Dawn's Plan of Indigenisation consists of two key components, the first of which contemplates the investment into New Dawn by independent indigenous investor groups, together with the participation of the National Indigenisation and Economic Empowerment Fund ("NIEEF"), a sovereign investor body controlled by the Government of Zimbabwe.  The second component provides for the transfer of equity interests in each of the Company's operating subsidiaries in Zimbabwe to Community Share Ownership Trusts and Employee Share Ownership Schemes amounting to 10% and 5%, respectively.  To take account of this dilution of New Dawn's interests in its Zimbabwe subsidiaries and to meet the additional effective 36% equity ownership of those subsidiaries by indigenous Zimbabweans through investment in New Dawn, the equity interest of New Dawn that would ultimately be acquired by several indigenous investor groups and NIEEF would be approximately 42%.

Since a key component of the Company's Plan of Indigenisation is the allocation of a 10% equity interest in its Zimbabwe operating subsidiaries to community and employee groups, New Dawn is currently in the process of determining an appropriate structure and procedure for implementation.  The equity interests in the Company's Zimbabwe operating subsidiaries to be transferred to these entities are expected to provide a direct and broad-based participation in New Dawn's Zimbabwe mining operations by indigenous Zimbabweans.  However, to enable the transfer of these equity interests, New Dawn's Plan of Indigenisation contemplates that each Zimbabwe subsidiary will be wholly-owned by the Company.  As New Dawn currently holds 84.7% of the equity of Falgold, the Company is in the process of acquiring the balance of the shares from the non-controlling interests, as described at "Acquisition of the Balance of the Shares of Falcon Gold Zimbabwe Limited".

In addition to meeting legal requirements, the finalisation and implementation of the Company's Plan of Indigenisation is expected to alleviate, to some degree, investor perceptions of the political risk of operating in Zimbabwe and thereby make external capital resources more readily accessible.  With access to adequate investment capital to support the Company's efforts to increase sustainable gold production from its properties in Zimbabwe, the Company intends to expand its employee base and contribute to the growth and development of the Zimbabwe economy.

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.  However, as there still continues to be substantial uncertainty surrounding the implementation of the indigenisation policy in Zimbabwe, there can be no assurances that the Company will be successful in its efforts to comply with the indigenisation laws and regulations under commercially viable terms and conditions, or at all.  The Company is currently unable to predict the effect of an inability to conclude or implement an indigenisation plan acceptable to all stakeholders.  Further information will be provided as and when such discussions with the Government of Zimbabwe have been concluded, or when developments otherwise warrant in accordance with the Company's continuous disclosure requirements.

Additional information on this matter is included in the Company's Management's Discussion and Analysis for the quarter and year ended September 30, 2012 filed on SEDAR (www.sedar.com) and available for viewing on the Company's web-site (www.newdawnmining.com).

Community Empowerment and Corporate Social Responsibility

The over-riding ethos of the Company has been and continues to be meeting standards of good corporate citizenship in all the communities in which it operates.  As previously reported, over the last 15 years, the Company has been and continues to be active in assisting local communities, including arranging educational initiatives and providing local community infrastructure and support.  There is a significant element of community involvement and support included in the Company's Plan of Indigenisation, which is expected to form the core of the Company's future involvement with the local communities (see "Indigenisation").

Corporate Social Responsibility ("CSR") covers a number of related areas from environmental considerations, to health and safety issues, employment equity, and also support for local, regional and national communities.  Up to this time, the Company has been influenced by a number of different factors and has taken an informal case-by-case approach when dealing with these matters.

In the spirit of the Indigenisation and Economic Empowerment policy of the Government of Zimbabwe and complementing its Plan of Indigenisation, the Company has begun to replace its CSR donor-recipient model with an empowerment approach.  This empowerment model will provide a more sustainable and equitable approach based on a dynamic partnership between the Company and the local communities in the vicinity of the Company's mining operations.  As a first step, a successful pilot program has been established with the selected community, assisted by independent facilitators, to determine priorities.  The first project is concerned with water management and is being financially supported by the Company.

PENDING TRANSACTIONS AND SUBSEQUENT EVENTS

Acquisition of the Balance of the Shares of Falcon Gold Zimbabwe Limited

The Company, as part of its efforts to finalize and implement its Plan of Indigenisation, has implemented a program to acquire all of the issued common shares held by non-controlling interests of Falgold, the Company's currently 84.7% owned subsidiary.  Falgold is one of the Company's three operating subsidiaries in Zimbabwe, the other two being wholly owned.  Falgold's shares are traded on the Zimbabwe Stock Exchange.

Prior to September 30, 2012, the Company initiated the acquisition process through a Scheme of Arrangement under the Companies Act of Zimbabwe.  This process requires that a circular in a specified format describing the offer be provided to the non-controlling shareholders, followed by the calling of a meeting of the shareholders to consider the offer for approval and, once approval is obtained, the submission of the terms of the transaction to the Court for approval.

The offer presented to the non-controlling shareholders of Falgold was, at the option of the shareholder, the exchange of one New Dawn common share for every five Falgold shares held or US$0.20 cash for each Falgold share held.  If a Falgold shareholder does not indicate a preference, they will be paid in cash for their Falgold shares.  The circular describing this offer to the relevant shareholders was issued in September 2012 and, at a duly constituted meeting of the shareholders on September 24, 2012, the offer implementing the Scheme of Arrangement was approved by all shareholders attending, thereby surpassing the legally specified majority for acceptance.  On October 3, 2012, the High Court in Zimbabwe issued an Order sanctioning the Scheme of Arrangement.  On November 13, 2012, the Directors of the Company reviewed the proposed transaction and authorized management to proceed.  On November 15, 2012, the Toronto Stock Exchange provided approval of the listing of the common shares of New Dawn that will be issued on the closing of the transaction, conditional on closing by February 7, 2013 and the provision of certain documents immediately following closing.  However, the Company must still obtain regulatory approval in Zimbabwe for the transaction.  As a result, the date of closing of the transaction may be delayed for several months.

The maximum number of common shares that may be issued in respect of this transaction is 2,899,888, but the amount may be significantly less depending on how many shareholders elect to receive cash rather than common shares of New Dawn.

Private Placement

Subsequent to September 30, 2012, in order to facilitate the acquisition of the Falgold equity interests held by non-controlling shareholders, the Company raised additional capital through a private placement of New Dawn common shares with a Zimbabwe-focused fund managed by an international investment firm.  The private placement closed on November 22, 2012, raising CAN$2,000,000 through the issue of 2,000,000 common shares with a subscription price of CAN$1.00.  The private placement shares are subject to a four month statutory hold period expiring on March 22, 2013. The private placement did not include the issue of any warrants or the payment of any finder's fees or brokerage commissions.

ABOUT NEW DAWN

New Dawn is a junior gold company listed on the Toronto Stock Exchange that is focused on developing its gold mining assets and operations in Zimbabwe.  New Dawn owns 100% of the Turk and Angelus, Old Nic and Camperdown Mines.  In addition, through its Falgold subsidiary, New Dawn currently owns 84.7% of the Dalny, Golden Quarry and Venice Mines, and a portfolio of prospective exploration acreage in Zimbabwe.  With the exception of the Venice Mine, all of these mines are currently in production and are geographically divided into three major gold camps.

In addition to gold production, New Dawn is also exploring prospective ground employing modern exploration techniques in Zimbabwe, a country that is proven to be geologically rich, highly prospective, and significantly under explored.

New Dawn, with its substantial gold resource, existing mines and production facilities, along with its current exploration programs, is a growing gold mining company in Zimbabwe, active in gold production and gold exploration.

Additional information on New Dawn, including its Mineral Reserve and Mineral Resource estimates, is available for viewing on the Company's web-site at www.newdawnmining.com and 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.

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 - 2012.  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.

SOURCE New Dawn Mining Corp.