New Dawn Mining Corporation, a junior gold exploration and mining company, which owns and operates the Turk mine in Zimbabwe, was one of the few producers that continued gold output in that country until late in 2008, but even it has been forced to suspend operations.
It is a tribute to the strength of the asset and the adaptability of the company on the ground that it managed to be one of the last significant gold mines standing in Zimbabwe. In doing so it dealt with difficulties as part of a normal course of business that operators in other regions would have considered insurmountable problems.
New Dawn’s CEO and president, Ian Saunders tells Mining Review Africa, “it is not as if we woke up one day and the situation was suddenly as we now have it. It is management’s job to be proactive and put plans into place to get the best out of an asset, but as the situation deteriorated our planning horizon slowly shortened. At first it shortened to months and then weeks and now we have been planning virtually on a daily basis.”
New Dawn, which is better known in southern Africa as Casmyn, its previous name, listed on the TSX in June 2008 in an IPO that raised CD$6 million. In 1996 Casmyn acquired 18 past and then producing mines in Zimbabwe and the 2008 IPO was to fund expansion, including work on a project in South Africa. However, because New Dawn is used to being self-sufficient and its operation in Zimbabwe was cash positive until it went onto care and maintenance in October 2008, the company does not foresee having to raise capital again soon.
The reason New Dawn eventually put Turk onto care and maintenance was due to the inability of the Zimbabwean Reserve Bank to pay the company the hard currency component of its income for gold produced. “However, for now we plan to retain the full staff at the operation,” New Dawn operations manager, Darryl Harding says.
Zimbabwean law requires that Turk sell its output to Fidelity Printers, the agent of the Reserve Bank in Zimbabwe. New Dawn opted for payment received in a combination of 25% (previously was 35%) Zimbabwean dollars and 75% (previously was 65%) hard currency.
“In the past there used to be lags in payment, up to three to six months, but these payments were inevitably brought up to date, and even now the Zimbabwean authorities don’t dispute the payment owed,” Harding says. “The cycle of payment lengthened, started at every four days, to every six weeks to every 12 weeks, to nine months, and now the government is simply unable to make the payments because of a lack of hard currency.”
A perverse advantage of the situation is that the mine has been using its workforce to increase development instead of production due to the payment problems, so when Zimbabwe’s socio-economic situation does turn around, the mine will be very well placed to rapidly and significantly increase output. It is an asset that has done the opposite of be allowed to run down as it went into survival mode; it has in fact grown its potential.
In fact, the Zimbabwean subsidiary of New Dawn had been cash positive until recently, supplying its parent company with some US$3 million in free cash between 2002 and 2007, but after its recent IPO New Dawn has spent US$25,000 on buying food and transporting this to its 650 mine employees in Zimbabwe. “We did not get into business to be an aid donor, but one of the reasons we have carried on mining so long as the situation deteriorated is the loyalty of our mineworkers and our loyalty to them,” Saunders says.
Due to the total uncertainty of the outlook in Zimbabwe, New Dawn will revise its strategy on an ongoing basis, with the next decision point to be in December 2008.
The company’s main assets in Zimbabwe are the Turk mine, which is located 55 km north of Bulawayo, and the adjacent Angus property. Turk has been a 25,000 ounce a year gold producer in the past and has the infrastructure in place to increase output to 40,000 ounces a year. “That would probably be the efficient target due to the nature of the greenstone geology that is typical of Zimbabwe,” Saunders says.
Turk which was mined continuously between 1911 and 1975 features 90 metre wide shear zones, with six primary reefs in parallel and which can’t be mined as a single unit. After WWII Turk was mined for long periods without a geologist on site and the mining followed the reef down dip. However, when the orebody hit an intrusion, a fault zone or a low grade patch, no extended exploration was done and as a consequence much ore was left behind. New Dawn has done significant drilling and geological modelling over the last 10 years and has come up with a NI43-101 compliant resource of 1.2 million ounces at Turk.
In addition to this, SRK has said it is not unreasonable to expect that between 1.5 and two million ounces at a grade of 4.0 to 4.5 g/t will eventually be mined at Turk, excluding the current total resource and reserve inventory.
Turk has three shafts; the Main Vertical and Armenian vertical shafts and an incline shaft. In the past mining went down to the 28th level (760 metres) but so much ore was left behind by the previous operators that New Dawn, is currently only developing and mining between the seventh level (210 metres) and the twelfth level (360 metres). The mine has worked recently to a cut-off grade of 2.0 g/t before it went into the care and maintenance mode and started to focus on surface reclamation work.
In the processing route, ore from underground is transported by trailer to a crusher storage pad before a scraper feeds the ore to a grizzly with a 250 m aperture. Oversize material is manually broken on the grizzly. The primary jaw crusher below the grizzly is set at 50 mm and the crusher product passes over the primary 20 mm vibrating screen, while the oversize passes through a 36’ cone crusher set at 10 mm. The milling circuit comprises a 8 x 16 ft and a 9 x 12 ft ball mill, the two running in parallel. The slurry from the thickener flows by gravity into a sump for cyanide addition before pumping to the two 450 m3 leach tanks and six 150 m3 adsorption tanks. The gold adsorbed onto activated carbon is removed once a day by mechanical pump and eluted offsite at Dawn mine in a modified Zadra process.
As mentioned, New Dawn also owns the adjacent Angelus property in the same area of the Bulawayo-Bubi greenstone belt, and the property is only separated from Turk by a dolerite dyke and the shaft system is only 400 metres away. While the Angelus shafts are not equipped for transport or hoisting, access to this mine is from Turk mine’s Main Vertical shaft. The Angelus mine is currently seen as an exploration property with a programme looking at the lateral and down dip extensions of the gold lodes mined previously on shallower and deeper levels. Correlation of the Turk lodes to those at Angelus is considered both important and relevant due to the fact that as development from the Turk progressed north and northeast, the principle lodes that were exploited were disrupted by a dolerite intrusion locally known as the Cross Dyke.
In addition to these properties, New Dawn holds a significant ground position in Zimbabwe and investors in the company see it as a strong play on the prospects of a turn-around in that country.
Zimbabwe’s gold production has been in steady decline and with Turk ceasing operations, it means the last of the country’s significant gold mines has shut down. Though Zimbabwe boasts of hosting one of the world’s seven large greenstone belts and the country was once the second largest gold producer in Africa, in 2007 it produced only about seven tonnes of gold. In 2008 this figure is likely to be about 3.5 to four tonnes. However, Saunders believes that Zimbabwe has the potential to produce 50 to 60 tonnes of gold a year.
“The country is at a crossroads and one has to be optimistic that a solution will be found that reflects the will of the people, or that the government starts to behave differently having seen the results of its previous approach.” Saunders says.
“However, what many people don’t realise is that we have used the past three years to replace inventory, to do exploration on site, and significantly increase our installed infrastructure on site. In this current care and maintenance mode, we are going to put time and effort into improved safety systems and undertake training, so that when things do improve we will have a motivated, well trained and safe work force ready to grow our ability as a gold producer.”
While New Dawn holds on in Zimbabwe and waits for the situation there to unfold, it is progressing its Blue Dot project in South Africa. Blue Dot is located in the North West province of South Africa near Shweizer Reneke to the southwest of Johannesburg. Located in the Amalia greenstone belt, the property includes two areas of underground workings; the Goudplaats mine and the Abelskop mine separated by five kilometers of dirt road. The Abelskop workings are accessed by two shafts 100 metres apart to a depth of 60 metres (2 level). There are three surface shafts to Goudplaats, which reach between 60 m and 120 m below surface. This mine was a small producer as Amalia gold mine in 1996-1998 and was then worked by Blue Dot Properties till its closure in 2002. New Dawn, which bought that company, has invested US$3 million in the property, and a processing plant was being wet commissioned at the end of October 2008. “This project is seen as a late stage pre-production project, and it creates a beachhead for New Dawn in a country outside Zimbabwe,” Harding says.” Blue Dot is fully BEE compliant. New Dawn has been preparing a NI43-101 compliant resource and reserve statement at Blue Dot based on exploration it has undertaken. This will likely see a reserve of some 10,000 to 12,000 ounces of gold, enough to produce gold for three to four years, which is a typical resource time-frame for a small greenstone belt operation. New Dawn, which is targeting output of some 5,000 to 6,000 ounces of gold a year at Blue Dot, does not expect it to become a larger scale producer.
Saunders says that obtaining sufficient electricity was an issue as it took some time to get power for the mill at Blue Dot, but in spite of that experience he does believe there are other potential assets in South Africa that would fit a company like New Dawn. The company has an ability to keep costs low and produce gold profitably on a relatively small scale as it has demonstrated in Zimbabwe where, before the hyper inflation and the managed exchange rate, it had a total operating cash cost of US$225-US$250/oz. “In South Africa labour and operating costs are higher and we would be looking at US$500/oz total operating costs,” Saunders says.