By Tito Maposa
ZIMBABWE Stock Exchange-listed Falcon Gold Zimbabwe has gone on a capital raising drive after its troubles recently exacerbated largely due to its significant exposure to foreign exchange risks.
This situation resulted in the company’s net loss widening by 1,519% in the six months to March 2019. In its financial results, published in September last year, the net loss of the crisis-hit firm widened to ZWL$27.2m, up from the ZWL$1.7m recorded in the same period in 2018.
The mining company also suffered a ZWL$24m foreign exchange loss, which contributed significantly to the company’s massive loss. This therefore saw the company contemplating capital raising initiatives to cover the holes that are continuously threatening its viability.
“Falgold wish to advise its Shareholders and members of the public, that the company is still contemplating a capital raise which, if successfully concluded, may have an effect on the price of the company’s shares,” said Falgold company secretary Qubeka Nkomo last week.
Foreign exchange gain or loss occurs when a company or a person sells goods and services in foreign currency. The value, when converted to the local currency of the seller, varies depending on the prevailing exchange rate.
The company is also still struggling to operationalise its main mill at the Golden Quarry Mine. Power supply was also terminated by ZETDC, compounding Falgold’s problems.
The struggling resources firm is also evaluating various options to deal with the current situation.
Falgold’s shares were suspended from trading on the Zimbabwe Stock Exchange in 2019 after it failed to finalise its September 2018 financial statements on time.
The company has faced operational challenges such as industrial strike at its at Golden Quarry Mine, which resulted in operations of both Golden Quarry and Camperdown mines severely flooded, while critical equipment was damaged, both on surface and underground.
Operations resumed on March 16, 2018 and employees returned to work having to start the long process of de-watering the mine shafts and making surfaces operational again.
While there have been no major improvements in the macro-economic environment, the company’s management remains upbeat if funding requirements are met from parent company, critical repairs of equipment will be done which will result in the re-opening of Golden Quarry Mine.
