Simmers checks Aurora's credentials

Simmers checks Aurora's credentials

SIMMER & Jack Mines (Simmers) should be the first to get a definitive answer to the burning question concerning the financial viability of Aurora Empowerment Services which has invested R1bn in a string of marginal gold mines.

The reason we take this view is that Simmers is doing a financial due diligence on Aurora as part of negotiations underway over the toll-treatment of ore from the former Pamodzi Gold operations at Orkney.

These mines sit adjacent Simmers’ Buffelsfontein (Buffels) operations. The Pamodzi Orkney mines do not have a treatment plant that can mill the ore which used to be toll-treated by AngloGold Ashanti’s nearby mines.

Buffels has plenty of spare milling capacity, enough to treat the ore to be mined from the Tau Lekoa mine which it has acquired from AngloGold Ashanti as well as the Pamodzi Orkney shafts, in addition to its own production.

The Orkney shafts are a natural fit with Buffels which is why Simmers bid for them as well but refused to up the offered price when it was rejected by the liquidators.

Simmers CEO-elect Deon van der Mescht told Miningmx during a site visit to Buffels last week that Simmers was talking to Aurora and “looking at ways to accommodate its ore.”

“We are currently doing a due diligence on Aurora which is a standard business procedure to ensure we do not take on any onerous risks in dealing with them.

“Aurora has significant funding behind it but we don’t know the identity of their backers at this stage.”

In addition to buying Pamodzi’s Orkney shafts, Aurora has also bought Pamodzi’s East Rand mines along with a 60% stake in DRDGold’s troubled Blvyooruitzicht mine as well as the small Primrose gold mine on the East Rand.

Aurora is headed by Nelson Mandela’s grandson Zondwa as MD. The chairman is Khulubuse Zuma, the nephew of president Jacob Zuma.

Questions over Aurora’s financial situation started surfacing at the end of November following rumours and complaints about late and partial payment of salaries at the Pamodzi Orkney and East Rand operations.

Zondwa Mandela told Miningmx on December 3 that he was unaware of such incidents and that his group had no financial concerns. He said a listing of mining assets was planned for the first half of 2010.

Headaches aplenty for Wesizwe's Solomon

WESIZWE Platinum’s troubles have by no means been settled by the reappointment of its ‘old’ board – the surprising outcome of the ill-tempered extraordinary general meeting (EGM) on Thursday.

Firstly, the reappointed CEO, Mike Solomon, will have to put a fine tooth-comb through his personal financial affairs to prove he was not using the company as his own personal bank account.

Secondly, there’s the question of the Bakubung-Ba-Ratheo – the community that owns the surface rights beneath which sit the minerals Wesizwe has been trying to mine develop, and which is a 12.58% direct shareholder in Wesizwe Platinum.

The complexity is that the community would not appear to be a homogenous body; far from it, it is splintered and factionalised. On the one side, there’s the Traditional Council, effectively the community’s statutory body; while on the other, is the Bakubung royal family, the Monnakgotlas.

The royal family doesn’t have any corporate influence officially as it’s the Traditional Council, represented by Ezekiel Monnakgotla, that has a board seat at Wesizwe. However, Ezekiel Monnakgotla is part of the royal family which, on the evidence of the EGM, exerts considerable emotional influence over the Bakubung community.

In any event, it’s royal family member and Ezekiel’s uncle, Mokgwari Monnakgotla, who wants to know why the Bakubung-Ba-Ratheo has swapped some of its shares in Wesizwe Platinum.

The shares under question by Mokgwari Monnakgotla are those that have been swapped for R500m in cash in a deal brokered by Musa Capital, the Traditional Council’s long-standing advisor, and put into Newshelf 925. Mokgwari hasn’t heard of Newshelf, even though it has been in existence for a number of years and identified in Wesizwe’s 2008 annual report as a 11.96% shareholder in Wesizwe. He wants answers.

Solomon has said the policy has not been to dabble in shareholder matters. But The X-Factor believes this is one he can’t afford to ignore as it has wide company resonance. The government’s minerals resources department doesn’t favour empowerment firms loaning or selling their rights in mines, and is particularly chary of the kind of corporate maneouvres the Bakubung-Ba-Ratheo seems to have become embroiled in.

The government’s minerals resources department doesn’t favour empowerment firms loaning or selling their rights in mines

In essence, Wesizwe Platinum’s empowerment scheme may, in the eyes of government, become heavily compromised.

It’s messy business.

We don’t like the look of Musa Capital’s Newshelf 925 either.

When asked if he were a beneficiary of Newshelf 925 – the vehicle into which Bakubung-Ba-Ratheo shares were placed after they were swapped for the R500m in cash – Wesizwe’s financial director, Nyasha Tengawarima, said that he had been offered shares but had declined them.

This is of capital importance because you wouldn’t want to see Wesizwe’s board members benefting from shares initally given for empowerment purposes.

Tengawarima also said that Solomon and Charles Sambo, COO of Wesizwe Platinum (now out of contract) had also been offered shares in Newshelf 925. They also turned them down.

This is good to know, but who on earth is doling out shares in Newshelf 925 in the first place?

As we said: messy.

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