New Dawn Mining (TSE:ND) sank 50% on the Toronto exchange on Friday after announcing a meeting to discuss share consolidation and the recent close of its Zimbabwe gold mine, Dalny.
By late afternoon the firm had recovered slightly, showing a 20% loss and trading at $0.21 cents per share.
Friday's share price hit was much bigger than the 14% lost when the junior miner announced it was shutting down the mine on August 30 after the Zimbabwe Electricity Supply Authority cut its power supply – the company had not paid its bills due to a "serious liquidity problem."
Mineworkers were placed on unpaid leave and the project on "care and maintenance."
Exacerbating the liquidity issue is Robert Mugabe's government which has been pushing for majority shares in the mine. Under Zimbabwe's indigenisation process, black Zimbabweans must hold at least a 51% stake in foreign-owned firms.
The firm says indigenisation has prevented it from "raising the capital necessary to fund needed investment."
The special meeting of shareholders is set for October 31 at which time the company will discuss moving its jurisdiction to the Cayman Islands – for tax purposes – and consolidating common shares on a 100,000 to 1 basis.
"Combined with limited cash resources in Canada and in Zimbabwe, there is an increasing risk that additional deterioration in the current business and economic environment in Zimbabwe will reduce the Company’s strategic options even further, and will jeopardise the continuing existence of the Company," New Dawn noted in a press release.
The miner operates six mining projects, including Dalny, all of which are in Zimbabwe.