Orkney’s new knight in Chinese armour

[miningmx.com] — THE first of 2,500 laid-off workers at troubled Pamodzi Gold’s Orkney mine could be back at work by the end of October if the court this week approves the R150m buyout offer by a Chinese-South African consortium.

The bid, announced last Friday, sees BEK Resources, a local consortium headed by Elias Khumalo, and the SSC Mandarin Group teaming up to buy the mine through a joint venture known as China African Precious Metals.

The bid comes after Aurora Empowerment Systems, headed by President Jacob Zuma’s nephew, Khulubuse, lost its preferred bidder status for Pamodzi’s assets and at a time when more than 5,300 former Pamodzi workers are out on the street and are owed millions by Aurora.

In a rare interview in Durban this week, the publicity-shy Khumalo, a close associate and backer of the president, was upbeat about the acquisition.

“There are a lot of people who are saying that this is a political transaction aimed at saving the president embarrassment and that this is something he has asked me to do. This is not the case.

“This is a business deal that is also motivated by a bid to save jobs and rescue people’s livelihood while making a profit in the long term.

“I have not been asked to do this by the president. I have not formally briefed him when we have met, but I will do so, just as I have briefed the leadership of the minerals and energy department,’ Khumalo said.

Khumalo’s consortium, which already owns diamond mines in Free State and Northern Cape, and has signed memorandums of interest in two other as yet unnamed gold mines, is interested in bidding for Pamodzi’s East Rand mine if it goes up for auction.

“We are interested in the East Rand mine, which is a bigger, better and potentially more productive mine, with a longer life span than Orkney,’ Khumalo said.

“However, it has been badly stripped and its assets have deteriorated terribly since the last balance sheet for us to make a bid now. If it goes on auction, we will express interest.’

Khumalo is unfazed by the letter of demand from Aurora’s directors to joint provisional liquidators, who are administering the Pamodzi assets, for R15m they claim to have spent on upkeep and their threat to interdict the sale if their demand is not met.

In it, the directors, who include Khulubuse Zuma; Nelson Mandela’s nephew, Zondwa; President Zuma’s lawyer, Mike Hulley; and Thulani Ngubane say they will go to court and halt the sale if the joint provisional liquidators fail to pay them.

Insiders believe the legal threat is an attempt by the Aurora brass to force the hand of the current inquiry into alleged asset stripping by them. The inquiry was appointed by the Master of the High Court in Pretoria and continues next week.

“There is no legal standing for them to stop the sale. This is a matter for Aurora and the joint provisional liquidators to sort out, even if it is at court, and has no relevance over the current deal,’’ Khumalo said.

“I don’t believe that Aurora will do anything to jeopardise the transaction as they support it.’

The lawyer acting for the joint provisional liquidators, John Walker, said they would “vehemently’ oppose any action by Aurora to recover the money, a deposit paid on the R600m they had failed to raise to pay for the mine. “Your client’s threatened application…is stillborn, vexatious and fraught with malice,’ Walker said in a letter to Aurora’s Durban lawyer, Ahmed Amod. “As a result, our clients will seek a punitive costs order against your client as part of their opposition to that application.’

Unions whose members are owed millions by Aurora will also oppose any bid by its directors to secure money from the liquidators.

Khumalo told City Press that once the deal was approved, the new owners would pump R1bn into Orkney (up from the original R525m they had budgeted), starting with refurbishment of its assets and the construction of a gold processing plant.

Khumalo believes that in the long run Orkney can turn a profit and that their investment will pay off.

Previously, the mine had farmed its gold ore out for production to AngloGold.

“We have a recall agreement with the unions and will start with re-employing workers who were laid off, who total 2,500, 500 of whom were sourced from labour brokers,’ Khumalo said. “I’m a supporter of government policy and we’ll eventually take on those employed by brokers directly.

“This isn’t a situation where we can buy the mine on Tuesday and start mining on Friday, but we hope to have the first of several tranches of workers back on the job by the end of October if our timetable works out.’

Khumalo believes that in the long run Orkney can turn a profit and that their investment will pay off.

“Yes, we are trying to help out and address a very bad and very embarrassing situation, but we believe that we will make money out of this in the long term.’’

Khumalo has begun talks with the National Union of Mineworkers and Solidarity, both of which have backed the sale.

– City Press