TORONTO (miningweekly.com) – Gold miner New Dawn Mining on Thursday warned that it might have to shut or sell its operations in Zimbabwe if the gold price continued to slide and its cost-reduction measures failed.

New Dawn, which operates five mines in Zimbabwe, is implementing measures to drive down costs, following a strategic review of its operations in an April review.

Lower gold prices, combined with the uncertainty surrounding the implementation of Zimbabwe’s indigenisation policy and current limitations on the availability of investment capital, have placed "undue" pressure on New Dawn's mining operations.

Gold slid to a low of $1 192/oz on June 28 - a level not seen since mid-2010 - and despite a recent rebound taking the metal to a range of $1 200/oz to $1 300/oz in July, prices are still well below the high of $1 889/oz in 2011.

The TSX-listed junior has now frozen all capital development projects, except those needed to sustain production for six months. It also negotiated temporary price reductions with suppliers of various critical supplies, ranging from 5% to 15%.

New Dawn said it had successfully negotiated an initial 25% wage reduction pertaining to all the occupation levels of its 3 000 employees.

The Toronto-based company added that it would eliminate, or reduce, certain administrative positions in Canada and Zimbabwe, and that it had already reduced, or deferred, certain costs at its corporate offices in Toronto, including management compensation and board fees.

Further, New Dawn said it would focus on operating efficiencies, including adjusting the cutoff grades that were being mined, which could help improve the recovered grades and resulting gold output.

The company said it did not expect the cost-reduction measures to negatively impact on gold production in the short term, adding that it was exploring other options, including significant changes to its operating and capital structure, divestitures, joint ventures and various structured financings.

New Dawn reported a 4.7% year-on-year increase in gold production to 9 986 oz in the June quarter, of which 9 168 oz were attributable to the company. Its gold sales, on a consolidated basis, declined by 10.2% to $13.62-million, compared with $15.16-million a year earlier. The average sales price per ounce of gold declined to $1 399 for the June quarter, from $1 608 in the March quarter.