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Back to grindstone for Pamodzi workers

By unknown | Apr 15, 2009 | COMMENTS [ 0 ]

Marcia Klein and Kea Modimoeng

Marcia Klein and Kea Modimoeng

About 1200 Pamodzi Gold workers are expected back at work today to restart production at the company's Orkney operation following a stay of execution granted yesterday.

The return date for the provisional liquidation of Pamodzi Gold's Orkney operation has been extended to Friday and could be extended further as Pamodzi Gold still tries desperately to find funders.

Best Rock, whose R200million funding has not materialised for some months now, indicated that the funding was still coming.

Additionally, the provisional liquidators have been told that another $40million (about R362million) would be coming from an unidentified foreign funder.

But provisional liquidator Enver Motala warned yesterday that even if the R600million or so funding came through, Pamodzi Gold still had many hurdles to overcome.

The provisional liquidators confirmed that JIC Mining, a mining service provider, would start up production at Orkney today. Another two Pamodzi Gold mines , East Rand and Free State, remain under judicial management.

Motala said it was intended to apply to convert the judicial management orders to provisional liquidation orders so that the provisional liquidators could attempt similar rescue attempts at Free State and East Rand as they had done at Orkney.

"All these mines are in very distressed situations," said Motala, adding that there should be no illusions that these could be rescued overnight.

Orkney's total liabilities were R337million, East Rand's, excluding its hedge, were around R300million and Free State's R300-million.

Should East Rand be liquidated, Motala said the hedge would become "crystallised", with its liability anything between R600-million and R800-million.

Production at Orkney will now proceed on a staggered basis, and will start by employing 1200 people. It was hoped that the remainder of the mine's 2800 staff would be re-employed within three months.

JIC chief executive Jagdish Parekh said JIC was employed by the liquidators to bring the mine back to production, attempting "to turn the mine around and resuscitate the revenue cycle" for the benefit of employees and creditors.

Francois Naude, who runs the mine, said it was a viable operation, but with cash flow difficulties. At 160kg a month, which he hoped would be reached within a few months, the mine would be at break even at the current gold price.

JIC will need to put in R18million to R20million immediately for operational purposes.

Motala said that Simmer & Jack was currently doing a feasibility study at Orkney with a view to making an offer.

The provisional liquidators were approached by two other potential buyers, one an Australian company.

JIC, which employed 7500 people and was a provider of mining services, was not in the business of owning mines or mining rights, Parekh said, and was not a potential buyer.

Lesiba Seshoka, National Union of Mineworkers spokesperson, said: "Last week we had a huge industrial action by our workers demanding their hard-earned March salaries. While we accept any progressive move by Pamodzi Gold in trying to address the problems, we feel the company should do things right this time."


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