Falcon Gold threatens closure

Falcon Gold threatens closure

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By Staff Reporter

FALCON Gold Zimbabwe, one of the country's biggest gold mining companies, threatened at the weekend to close shop, citing low prices and unviable economic environment.

The subsidiary of Luxemburg-based Falcon Investments Holdings, said Zimbabwe's fixed exchange rate had made it unviable to continue mining gold, the nation's biggest single export.

It also complained that spiralling inflation of more than 1 200 percent, and associated high operational costs, had forced it to discontinue exploration in order to keep afloat.

The Harare government under intense economic pressure has fixed the Zimbabwean dollar at Z$100 000 to the US dollar, an exchange rate which industrialists consider unrealistic in view of high inflation.

The government also controls the marketing of gold, which was exclusively sold to the Central Bank.

In a letter to the authorities, Falcon Gold said it would shut down in coming weeks if its concerns were not addressed by the government.

The company produces between 40 and 47kg of gold a month, ranking among the nation's biggest producers.

"I do not mean to pressurise you, but unless the authorities revise the gold price immediately, the company will have to place a cautionary in the press and give notice of closure," the company said.

Many mining companies were in a similar situation in the country, which is facing its worst economic crisis since independence in 1980.

The government’s plan to nationalise mines was likely to make mining even less viable in the troubled economy led by Robert Mugabe. - panapress
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