new acquisition

New Dawn Mining acquires CAG


17/06/2010 00:00:00
by Gilbert Nyambabvu


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Take-over ... Kadoma-based Venice gold mine


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THE country's gold mining sector has undergone yet another change after Canada-based New Dawn mining announced it ahs acquired a controlling 89 percent interest in the struggling London-listed Central Africa Gold (CAG) through a share swap.

New Dawn operates the Turk and Angelus gold mines located close to Bulawayo but the deal with CAG will see the company add the Kadoma-based Dalny and Venice gold, Golden Quarry, located south-east of Gweru, as well as Camperdown and Old Nic mines to its portfolio of properties.

Under the deal the three main investors in CAG ? Emerging Capital partners (50 percent), HBD Zim Investments (28 percent) and Investec Asset Management (10 percent) ? would become shareholders in the enlarged group.

New Dawn said the acquisition was in line with it?s objective of becoming a mid-tier gold producer and a key player in Zimbabwe?s recovering mining sector.

?Through this transaction, New Dawn is increasing its gold resource base and associated mining capability to support a consolidated annualized production of 50,000 to 60,000 ounces of gold within the next 18 to 24 months,? the company said in statement.

The enlarged company says it plans to increase gold output to 100000 ounces within four to five years ?with the ultimate goal of reaching a consolidated annualised production target of 200,000 to 250,000 ounces?.

CAG was seen to be vulnerable to a take-over bid after struggling with working capital requirements and various other challenges which nearly saw it expelled from the London-based Alternative Investment Markets (AIM) last year.

New Dawn said it would immediately launch a strategic review of CAG?s operations.
?In particular, the Company is evaluating CAG's short-term and long-term working capital requirements to fund the development and operations of CAG's gold mining assets, which the Company contemplates will be addressed through a combination of internally generated funds and new debt and or equity,? the statement added.

Zimbabwe?s mining sector which had virtually ceased operating over the last few years with most properties either shut down or on basic care and maintenance is beginning to recover buoyed by an improved local operating environment and better commodity prices.

Operators have welcomed the introduction of the multiple currencies in place of the Zimbabwe dollar as well as a raft of liberalization measures introduced by the central bank but continue to express concern over power supplies and the country?s indigenisation programme.



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