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JCI throws Matodzi lifeline
David McKay
Posted: Sun, 31 Jul 2005
[miningmx.com] -- JCI has thrown Matodzi Resources a financial lifeline after the empowerment firm’s auditor said on Friday it was in danger of bankruptcy after restating its 2004 financial figures.
Matodzi was required by new accounting protocol AC133 to report preference shares, issued in a previous fund-raising exercise, on its balance sheet as debt. As a result, Matodzi’s liabilities exceeded its assets.
In order to ease the balance sheet, JCI agreed to convert 200,000 preference shares issued to it by Matodzi into ordinary shares acquiring 57% of the firm, but cutting the stake owned by Sello Rasethaba, CEO of Matodzi, by a third.
Matodzi’s auditing firm, Charles Orbach & Company, said Matodzi might not be able to continue as a going concern if its capital restructuring plan failed.
Matodzi Resources’ only operating asset is the Letseng Diamond Mine which
is located in Lesotho. The mine, which was recently reopened, is known for producing high value diamonds. In one week during January, four flawless clear diamonds with values ranging between 112 carats and 71 carats were mined.
It had been suggested in the past that Letseng could be listed on the Toronto Stock Exchange. Matodzi said attempts to unlock shareholder value were being sought.
Rasethaba vowed to reclaim Matodzi from JCI and re-establish the company’s empowerment status.  About 80% of the loss was due to AC133 and the rest was due to operations 
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