Falgold share price hits 4-year high

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FALCON Gold Zimbabwe (Falgold) shares spiked to a four-year high in October after gaining 20 percent on the Zimbabwe Stock Exchange (ZSE) to close at three cents.
In September, the ZSE lifted a seven-month suspension on trading of the company’s shares.
Falgold had been suspended after it failed to publish its financials within the stipulated time-frame.
“The movement in the stock price comes at a time the company is in an unattractive position given all its troubles, as such, it probably is a result of market-wide momentum in October,” a local equities analyst said this week.
“In the recent past, the stocks have had a tendency to rally whenever there are movements in exchange rates, and the movements in the exchange rate were particularly volatile in October,” they said.

Falgold’s shares last traded above 3 cents in January of 2015.
The company has been in a precarious position for decades now as it has persistently held a negative net asset position, a precursor to insolvency.
It also has had numerous problems over the period, including liquidity challenges, strikes, and a recent dispute with RioGold over the payment of Dalny Mine, all of which have been compounded by the country’s economic challenges.
The gold price slump during the 2012 and 2013 financial periods also added to the company’s troubles.
In December last year, the company announced the delay of its year results due to a “catastrophic engineering failure” at one of its mills.
The company’s results for the half-year ended March 2019, which were also delayed, showed that the company incurred a $27 million loss during the period. This pushed its negative net asset position to $44 million, from $17 million in the previous comparable period.
However, the company says it has recently received a funding reprieve from its parent company.
“We obtained a letter of support from the ultimate holding company New Dawn Mining Corporation, which states that they will not demand repayment of loans in the 12 months after period end and will extend principal repayments due for another year,” the company said.
Meanwhile, the company says it is, with the assistance of the majority shareholder, exploring options for additional US$2,5 million to US$3 million of funding to enable repair of the mill and resuscitation of mining operations but has not finalised the funding structure.
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