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BRC DiamondCore in liquidation battle
Allan Seccombe
Posted: Tue, 21 Apr 2009
[miningmx.com] -- TWO applications have been lodged in the Kimberley High Court in South Africa for the liquidation of two BRC DiamondCore subsidiaries for outstanding debts totalling R9.38m.
The applications for the urgent liquidation of Diamond Core Resources and Diamond Core Technical Services were brought before the court on April 17. The matter was adjourned until June.
"The judge reviewed those papers in his chambers and dismissed the urgency of the matter," said BRC financial director Brian Scallan.
"We are contesting the applications. We dispute the basis of the claims of the two applicants," Scallan told Miningmx.
Trade union Solidarity says its members, part of the 188 people retrenched from BRC DiamondCore’s South African exploration assets, have not been paid for February, March or up to the termination of their contracts in April.
Scallan
confirmed wages were delayed and that BRC is in discussions with Solidarity and the larger National Union of Mineworkers.
Solidarity has given BRC DiamondCore until June to pay its members or it will join those seeking liquidation of the TSX- and JSE-listed company’s South African subsidiaries.
BRC is in talks to raise capital. "It's coming along. We are in discussions with several parties, but I would not want to say anything at this stage," Scallan said.
Copies of letters from Scallan, which were attached to the applications, showed the company telling creditors that it hoped to have financing in place in the first quarter of 2009. The capital raising included the possible sale of non-core assets.
"BRC is in several negotiations with different parties for either the sale of non-strategic assets or a direct investment in the company. One proposal is a sale of core assets. The timing of this has not been fixed," Scallan said in an e-mail dated 5
December 2008.
The letter went on to say BRC hoped to conclude a transaction by the second half of January "and have the cash injection as soon as possible thereafter." That has evidently not transpired.
One of the companies rumoured to be casting an eye over BRC's South African assets is JSE-listed diversified mineral holding company Miranda Minerals, which has started producing anthracite in South Africa. Miranda CEO Ron Nel has told Miningmx the company wants to bulk up its diamond portfolio, but would neither confirm nor deny the rumour.
The applications were filed by security company Quemic Group and River Corporate Finance, a private firm appointed the sole corporate adviser when Canada’s BRC Diamond Corporation merged with the JSE-listed Diamond Core Resources.
Quemic claims it is owed R4.38m - excluding interest in unpaid bills - since October 2008 for services rendered at the Silverstreams, Paardeberg and De Kalk exploration
sites.
River Corporate Finance is claiming R5m for money it says it was owed but not paid by cash-strapped holding company BRC DiamondCore.
BRC has placed all its exploration work on hold and put its projects into care and maintenance, cutting off a flow of cash it generated from diamonds produced during bulk sampling work. It has retrenched staff, citing the weakness in the diamond markets.
BRC’s current liabilities of C$13.9m for the year to end-December 2008 dwarf its current assets of C$882,216, of which the cash component is just shy of C$200,000. Those current liabilities are payable in calendar 2009.
Both parties pointed out in their applications that their financial claims against BRC’s subsidiaries were not disputed until recently, and both accused the company of “creating” disputes to delay the payment of outstanding liabilities.
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