[miningmx.com] — ANGLOGOLD Ashanti has suspended services to the Orkney gold mine operated by Aurora Empowerment Systems and held by liquidators for outstanding debt.
This is a serious blow for Aurora, which has lurched from crisis to crisis as it plans to reverse liquidated gold mines formerly owned by Pamodzi Gold into a listed vehicle as a requirement to it receiving critical funding of up to $200m from Global Emerging Markets (GEM).
It is understood the reverse listing into a cash shell called Labat will happen by the end of August. While some regulatory hurdles have been cleared there is still a long way to go before the listing takes place and the funds from GEM is unlocked.
Aurora has committed itself to spending around R605m to buy the Orkney and Grootvlei mines from the liquidators. It has not yet paid this money to the liquidators, but it is managing the two mines. The mines are losing money and are running into serious problems that have attracted the attention of the government.
Aurora, whose managers had no mining experience, appears to have rushed into restoring production at the mines rather than sitting back and developing a comprehensive plan to restarting them. A Malaysian group called AM Equity had backed Aurora initially but then pulled out.
The latest body blow to Aurora is AngloGold terminating water, electricity, compressed air and sewage services to Orkney for unpaid debt of R38m incurred in the past 10 months and a further R59m since the mine was put into provisional liquidation in March 2009.
Drinking water and electrical power to residences at the Orkney mine will continue as long as they are occupied, AngloGold said.
“Our decision follows the failure of the liquidators of Pamodzi Gold Orkney to settle debt of about R38m owed to us for services supplied to the operation over the past 10 months,” it said in a statement. “This is despite repeated requests by us for payment of amounts owing.”
Liquidator Enver Motala said he was surprised at AngloGold’s decision because the liquidators had met the gold miner just last week to outline the progress it was making in ensuring it received money from Aurora to pay creditors.
AngloGold spokesman Alan Fine disputed Motala’s version of events, saying it had been made very clear at the 25 May meeting, both in writing and verbally, that AngloGold would terminate services unless the R38m was paid and a new service provision agreement was entered into.
“We’re surprised that he was surprised,” Fine said.
“We’ve not suddenly come down hard on them. We’ve been begging them for months and months,” he said.
Aurora is generating no income at the moment, with all its mines in care and maintenance until it lists and secures the GEM money.
AngloGold has been paid only a small amount of the R59m owed to it by Pamodzi Gold, which has terminated its listing after being placed in liquidation. The full AngloGold claim will be investigated in a verification process once the liquidators have received payment for the mines from Aurora.
“The debt is increasing by R1.8m to R3.5m per month, depending on the nature of Pamodzi Orkney’s operations in any month,” AngloGold said.
“AngloGold Ashanti can no longer justify to its employees or shareholders the accumulation of debt which compromises its ability to maintain its own operations,” it said.
Aurora management was unavailable for immediate comment.
Meanwhile, a Chinese group that had visited Orkney and Grootvlei with a view to making an offer to the liquidators for the mine have “gone very quiet”, Motala said. There is no sign of an offer from the group.
