Peter Steenkamp, CEO Pamodzi Gold
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» Pamodzi to exchange gold for loan
» Reviving two old mines will kickstart Pamodzi
» Pamodzi to raise $50m by end-May
» Two more big buys pending for Pamodzi Gold


Pamodzi races to avoid JSE suspension
Allan Seccombe
Posted: Wed, 02 Jul 2008

[miningmx.com] -- PAMODZI Gold hopes to have a loan from a London-based financial institution in place by mid-July and report its annual financial results by the end of the month to avoid a suspension of trade in its shares on the JSE, said CEO Peter Steenkamp.

Pamodzi is negotiating a $50m loan, which it will repay with gold, to fund the development plans it has for the Orkney and President Steyn gold mines it acquired earlier this year.

“The process should have been finished by the end of June, but that’s been extended to about 15 July at the latest,” Steenkamp told Miningmx. “It’s on a knife’s edge at the moment. I don’t want to make the 15th the deadline but that would be a good time for it to be finalised.”
on a knife’s edge at the moment
Pamodzi asked the JSE for an extension in submitting its annual report to include the fresh injection of capital, he said.

The JSE told the market if the annual reports are not submitted by the end of July, trade in the company’s shares would be suspended.

The news on Tuesday knocked 12% off the share price. The shares were untraded on Wednesday, with the buy/sell spread at a wide R3 and R5.50 respectively. The shares are well off a 12-month high of R19.75.

The share was untraded on Wednesday.

“We have bought two assets that are double the size of our current assets and we need to put working capital into those assets,” Steenkamp said.

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“We have audited and reviewed figures, which we released at the end of the last quarter. There is nothing wrong with our figures, but with the two new assets we have to tell the market how we are going to turn them around and we need the money for that,” he said.

“The moment we get those finances sorted out we can make forward-looking statements as the directors. We can say we have the capital and we can run the business,” he said.

The loan will be settled with gold in a pre-paid forward agreement. It is not the same as a hedge position because it is a debt instrument that uses cash instead of gold, he said. It does not have to be accounted for in a marked-to-market way a hedge book is every quarter.

“That’s the kind of deal that’s on the table and what we’re trying to get the investor to take up. I’m very optimistic that we’ll finish in time,” he said.

Pamodzi estimates it will lose 35 kg of gold after a fire at its Orkney gold mine.

The 2 Shaft has been replanned. That portion of the mine affected by the fire will only be revisited in a year’s time.

“We believe, that with careful planning, we can get to the kind of annual plan we had for the operation. It’s still early days,” he said.