New Dawn Mining swings to Q4 profit, production, revenues soar

Zimbabwe-focused junior gold miner New Dawn Mining Corp. (TSE:ND) said late Tuesday that it swung to a fourth quarter profit from a prior year loss, and nearly tripled earnings on a sequential basis, as production and revenues rose sharply.

For the quarter that ended September 30, the company reported net income of $2.56 million, or six cents per share, compared to a loss of 1.01 million, or a three cent loss per share, a year ago.

In the third quarter ending June 30, 2011, New Dawn reported a profit of of $0.85 million or two cents per share.

For the latest quarter, the junior gold miner reported total gold production of 8,814 ounces, or 8,212 attributable ounces, more than double the 4,141 total gold ounces, or 4,024 attributable ounces, in the year-ago period.

In the previous third quarter, New Dawn recorded 6,841 ounces of total gold production, or 6,335 attributable ounces.

Total consolidated sales in the fourth quarter were US$14.06 million, at an average sales price of US$1,705 per ounce of gold. Of the $14.06 million, $13.15 million was attributable to New Dawn.

The latest sales are almost triple the total gold sales of US$5.06 million, or $4.95 million attributable, in the year-ago period, at an average sales price of US$1,239 per ounce of gold.

In the third quarter, the company posted revenue of $9.79 million, or $9.20 million attributable. 

New Dawn now holds a 100 percent interest in Central African Gold, furthering its goal of becoming a mid-tier gold producer of assets in Zimbabwe.

Central African has five principal gold properties in the country, which include the Dalny Mine, the Golden Quarry Mine, the Venice Mine, the Camperdown Mine and the Old Nic Mine. When New Dawn acquired an initial interest in CAG in June of last year, all the mines were on care and maintenance, but since the company invested heavily in these operations, four of the sites have now resumed operations.

Aside from the Central African assets, New Dawn owns and operates the Turk and Angelus Mines in the upper southwest area of Zimbabwe that have the potential to produce an estimated 35,000 to 50,000 ounces of gold per year.

Attributable ounces or sales reflects New Dawn's net ownership interest in each producing mining property for the respective period, after adjusting for other minority interests.

The company said it expects continued sustainable growth in quarterly production and revenues in fiscal 2012. New Dawn is currently expanding its consolidated annualized gold production, with a target of 60,000 ounces by the end of 2012 and 100,000 ounces by the end of 2014.  At year-end, the company is expected to have  2,000 tonnes per day of milling capacity.

During the year, the company made significant operational progress, it said, including arranging for continuous electrical supply contracts for power at Turk and Angelus, the Dalny and the Golden Quarry Mines.

New Dawn also raised $7.44 million of new equity to support operations and fund the integration of its Central African Gold assets.

For fiscal 2011, the company reported record consolidated revenues of $38.29 million, and net income of $4.21 million, or 10 cents per share, compared to revenues of $16.38 million and a net loss of $0.79 million, or two cents per share, in 2010.

Looking forward, the company said it plans to increase its current workforce in Zimbabwe of around 2,350 employees, funded from the re-investment of increasing operating cash flows generated by its mining operations.

Currently, the government of Zimbabwe is in the process of implementing an indigenisation policy under which all domestic businesses are to be 51 percent owned by indigenous Zimbabweans.

New Dawn's Zimbabwe operating subsidiaries, Casmyn Mining Zimbabwe Limited, Falcon Gold Zimbabwe Limited and Olympus Mines Limited, are all non-indigenous companies for purposes of the Indigenisation and Economic Empowerment Act signed in 2008.

Under the new policy announced earlier this year, each non-indigenous mining company with net assets in excess of US$1 was required to dispose of 51 percent, less any percentage previously indigenised, of its shares to a designated entity by September 25, 2011.

In August of this year, New Dawn said it signed a "confidential memorandum of understanding" document with the Ministry of Youth Development, Indigenisation and Economic Empowerment, which established a broad-based framework for engagement with the government in regards to the implementation of New Dawn's proposed indigenisation plan.

The plan includes engaging directly with indigenous sources of capital in Zimbabwe and, potentially, arranging a secondary listing of its common shares on the Zimbabwe Stock Exchange, the company said. New Dawn is also considering establishing employee share ownership schemes and community trusts that would result in broad-based participation by indigenous Zimbabweans.

The finalization of the plan, which could take several months, is expected to provide New Dawn with access to additional working capital resources to support its efforts to increase gold production, it concluded.

"In light of the current uncertainty surrounding the implementation of the Indigenisation regulations over a short timeframe, management of New Dawn believes that the company's current share price, which has lost substantial value since the Indigenisation regulations were gazetted on March 25, 2011, is now well below fair value, and does not reflect the company's inherent value or future potential," New Dawn noted in a statement. 

"To the extent that the company is able to obtain Zimbabwe government approval for its proposed Indigenisation Plan and, in conjunction therewith, arrange for equity-based transactions reflective of fair value with qualified indigenous investors, the elimination of the uncertainty with respect to Indigenisation and the additional operating capital would likely be viewed positively by the market."

Shares of New Dawn were up more than 2.8 percent on Wednesday morning, trading at $1.08 as of 9:53am ET.