Aurora confident it will buy mines

2010-04-24 08:53

Aurora Empowerment Systems directors are upbeat that they can meet

tomorrow’s deadline to secure ownership of two liquidated gold mines they are

managing.

If they don’t prove they have the funds, the liquidators say they

have a Chinese consortium waiting in the wings to buy the operations.

It has been a fraught few months for Aurora, which is headed by

Zondwa Mandela, grandson of Nelson Mandela, and Khulubuse Zuma, nephew of

President Jacob Zuma.

Aurora’s coffers ran dry after their Malaysian financial backer, AM

Equity, pulled out, leading to a suspension of mining and a wave of strike

action at the Orkney and Grootvlei gold mines.

Aurora made a bid to buy the two mines for R600 million from the

liquidators of Pamodzi Gold. Aurora has been managing the mines since last year

on behalf of the liquidators, ahead of taking ownership of them.

Aurora director Thulani Ngubane said deals were being finalised

with new financial backers.

“We’ll be showing our guarantees to the liquidators on Monday to

consummate the deal. I’m absolutely confident about that,” he said.

He added that the unveiling of the backers, said to be North

American, was delayed this week because of ­restricted air travel due to the

­volcanic eruption in Iceland that grounded flights in Europe.

“We only have to give a guarantee for $100 million (about

R750 million) to the liquidators. We are also putting in place another

$100 million that we can draw down on.”

Aurora is advancing plans to reverse the gold mines into a

JSE-listed cash shell called Labat, in which it has a 46% stake, he said.

Enver Motala, one of the mines’ liquidators, said if all went wrong

and Aurora did not present financial guarantees to the liquidators ­tomorrow the

deal would be terminated immediately.

However, he said the deadline might be extended even if Aurora

didn’t have all the documents in place but had sufficient documents to show the

financing was in place.

“The Aurora guys are sounding more upbeat than I’ve heard them for

a very long time. We’ll see what happens on Monday,” Motala said.

A Chinese consortium had visited the Orkney mine on Thursday and

the Grootvlei operations on Friday with a view to making a bid for the mines, he

said.

The indicative bid that has been put on the liquidators’ table was

“marginally higher” than that from Aurora, he added.

Aurora is favoured because of its strong empowerment credentials

but it has lost a tremendous amount of credibility with the continuous stream of

bad news over unpaid labour, strikes, shaft closures and ­losing its financial

backer, AM ­Equity. It has fallen behind on electricity and water payments

too.

If there is a Chinese play for the assets they would need to secure

an empowerment partner and bring in fat wallets to recapitalise the mines.

Ngubane confirmed Aurora had agreed to the Chinese consortium

visiting the operations.

“There was nothing we could do to stop them,” he said.

 –

miningmix



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