[miningmx.com] — METOREX has finally managed to dispose of Consolidated Murchison (Cons Murch) but will have to kick in about R65m to help Bernard Swanepoel and his To The Point Growth Specialists (TTP) company take the operation over.
Con Murch produces antimony and gold, but lost R79.2m in the year to end-June 2009. The operation was previously described to Miningmx by a Metorex insider as a “non core liability’.
According to Metorex CEO Terence Goodlace , “The recapitalisation and socially responsible disposal of Cons Murch represents the final step in Metorex’s strategy to refocus operationally as a base metals company.’
Goodlace told Miningmx the R65m total cost to Metorex was broken down into R51m to help recapitalise Cons Murch plus a R15m top-up payment into the rehabilitation fund.
He said: “We got approval from our shareholders to close or dispose of Cons Murch, provided the cost did not exceed US$13m or R100m.
“The closure option included many inherent social and economic complexities. Metorex sought to secure the ongoing employment of staff at Cons Murch and wanted to provide a platform for the future development of the mining operations in the disposal option.
“The transaction presents an opportunity for Metorex to implement the disposal option in an orderly and socially responsible fashion whilst limiting the financial effects on Metorex.’
Metorex will sell Cons Murch for R1 to Cons Murch Mine, which is owned 74% by TTP and 26% by the Cons Murch black economic empowerment trust.
The transaction is structured in three parts. Goodlace pointed out that once the asset is transferred to Cons Murch Mine, it would draw “a line in the sand’ when it came to Cons Murch’s financial exposure, with the exception of rehabilitation liabilities.
Responsibility for rehabilitation costs would shift fully to the new company only once Section 11 consent for the transfer of the new order mining right over Cons Murch had been obtained.
Goodlace said: “We are looking to limit our liability and make sure it’s a going concern.
“Bernard has been on the operation since last November, running it for us on a contractual basis. He believes it has a good future, although it does require capital investment to deepen the existing shafts.”
Swanepoel told Miningmx, “we have managed to make a profit on the operation for the past two months including the capital costs incurred so far on deepening two of the shafts which we have already started.”
Swanepoel said Cons Murch had been put into TTP to finalise the deal with Metorex as rapidly as possible. He said it would not remain within TTP and that various options were being looked at for its future.
Goodlace said, “Our strategy is to focus Metorex’s operations on base metals. Keeping a small antimony operation is not part of what we have set out to do. “
The Metorex statement said TTP “had undertaken to procure an equity investment of R20m in Cons Murch Mine and has undertaken to provide Cons Murch Mine with adequate financial support for a minimum period of 12 months from the completion of Part A of the transaction’.
Part A is the disposal to Cons Murch Mine of Cons Murch for R1. During this stage, Metorex will kick in the R51m capital injection but retain the existing old order mining right; the existing new order prospecting right and the responsibility for the marketing and sale of all gold and antimony produced.
Suspensive conditions for closure of the deal include obtaining all regulatory approval for Part A by December 15 or an agreed later date, and the Department of Mineral Resources granting the new order mining right and S11 consent for its transfer before December 31 2013.
