Falco Gold sees future in Africa

With a sharp eye on costs, Falconbridge Gold (TSE) will be turning more and more to southern Africa (especially Zimbabwe) for its expanding exploration and production.

“Regrettably, the company has received little or no recognition in the marketplace for its shares following last year’s acquisition of the African assets from our parent company, Falconbridge,” Chairman Brian Ferguson told its well attended annual meeting.

The company is already producing gold in Zimbabwe at a cash cost of US$187 per oz. from orebodies grading 0.13 oz. per ton. “That’s waste rock in almost any underground mine in Canada. Certainly no company would contemplate a production decision for any such deposit in this country in its current environment,” Ferguson noted.

The company has already earmarked $24.2 million for doubling production from its Kopje and Blanket mines there to 60,000 oz. from which it expects a return in excess of 28%.

This involves sinking a new 1,000-metre (3,200-ft.) shaft at Blanket and constructing a completely new mill. Deep underground drilling there is continuing and by year’s end is expected to substantially increase the 2.7 million tons of ore already indicated, the meeting was told. As well, surface drilling at the Golden Kopje has been “extremely successful,” Ferguson said, adding that ore reserves for the two mines are more than sufficient to justify expansion and to maintain production for many years.

Overall company earnings for the past year were only minimal at 1 cents per share. However, it is now in a much stronger position than a year ago and poised to substantially improve its earnings performance, the meeting was told. It has $5.6 million cash on hand and no callable debt. Cash flow from its Timmins operations, which are running out of ore, can be maintained for another 3-4 years. However, the company holds a lot of ground there and has allotted $400,000 for exploration there this year. “We are still enthusiastic about finding another Hoyle Pond type deposit somewhere on our properties in Timmins,” Ferguson said.

And on the prospects for the gold price? He is convinced it has bottomed out.