Johannesburg - Pamodzi Gold's provisional liquidators have secured R45m towards the company's Free State assets and are finalising a loan for the East Rand mines. Plans to bring the Orkney operations back into production have foundered on union concerns.
Pamodzi, which has 12 000 employees, has incurred debt of more than R1bn and the company has been placed into provisional liquidation. The joint provisional liquidators (JPL) are looking for buyers of the company's assets.
Repeated assurances that funds or firm commitments on a capital injection of about R200m from a commodity brokerage called Best Rock Funding would be forthcoming have still not materialised.
"As time is of the essence, the joint provisional liquidators have continued to explore all other avenues and secure suitable offers for the assets of the Pamodzi group of companies," the JPL said in a statement.
At the East Rand mines - the only operating asset within Pamodzi - the JPL are finalising a R40m loan from Germany's HypoVereinsbank, a large creditor to operations.
The money will go towards pumping and water treatment costs, a major concern to environmentalists. This will ensure production areas are not flooded.
HypoVereinsbank and the JPL have agreed to crystallise an onerous hedging contract at the operations. Pamodzi's East Rand mines had a hedge book of about 100 000 ounces at a price of about $350/oz.
If the forward sales of gold not been crystallised the JPL would have considered cancelling the agreement, which to a great extent lies at the heart of Pamodzi's downfall.
Orkney due diligence
The Industrial Development Corporation, which has already invested R200m in the now-suspended JSE-listed Pamodzi, has pumped a further R45m into the Free State assets for which written offers have been received from potential buyers.
The fresh injection of cash will be split between paying wages and funding an ongoing care-and-maintenance programme at the President Steyn mine.
"There are some interested parties who have also expressed serious interest in acquiring the Free State operations. In this respect, the Joint Provisional Liquidators have received written offers," said Enver Motala, one of the liquidators.
At Orkney, where production was expected to resume in mid-April, unions have ironically frustrated those plans. The JPL agreed with mining services company JIC to restart output; the two groups are to share net operating profit on an equal basis.
However, the National Union of Mineworkers (NUM) said it has concerns about the rescue plans. A comprehensive document detailing the strategy was given to NUM at the end of April.
"The joint provisional liquidators await NUM's advice in this respect," the JPL statement said, pointing out that another union, UASA, also wanted to meet JIC and the JPL. UASA represents workers in the diamond, motor, manufacturing, transport, mining and engineering industries.
JIC is undertaking care-and-maintenance operations at the mine for which it receives no remuneration. The JPL are spending around R5.2m a month on care and maintenance at Orkney.
Junior gold producer Simmer & Jack is conducting a due diligence study of Orkney, which lies between its Buffelsfontein and Tau Lekoa mines, making for a good strategic fit. A decision is expected soon.
There are other expressions of interest in the mine; these are covered by confidentiality agreements.
The JPL have received R20m from the sale of gold ore from Orkney to AngloGold Ashanti between March 20 and end-April.
- Miningmx.com
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