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NATIONAL UNION OF MINEWORKERS. BRIEFING ON DEVELOPMENTS AND UPDATE ON THE CRISIS AT PAMODZI’S ORKNEY AND GROOTVLEI MINES. THE LIMITED RIGHTS OF UNIONS AND MEMBERS TO WATCH, WAIT AND SEE WHILST THE LIQUIDATORS, THE STATE, INSOLVENT AND PROSPECTIVE BUYERS BATTLE IT OUT.
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NATIONAL UNION OF MINEWORKERS BRIEFING ON DEVELOPMENTS AND UPDATE ON THE CRISIS AT PAMODZI’S ORKNEY AND GROOTVLEI MINES THE LIMITED RIGHTS OF UNIONS AND MEMBERS TO WATCH, WAIT AND SEE WHILST THE LIQUIDATORS, THE STATE, INSOLVENT AND PROSPECTIVE BUYERS BATTLE IT OUT. Presenters : Steven Bhengequla and Maja Mphahlele
INTRODUCTION • It has been four frustrating years to observe the developments unfolding at Pamodzi Orkney and Grootvlei • Aurora has never been a title holder in any mine, however there were preferred bidder nominated by the liquidators.
WHERE TO FROM HERE? Comparing Pamodzi Orkney & Grootvlei to Pamodzi Free State which was bought by Harmony Gold, it is evident that liquidators should never prefer a bidder who has not done the following: • Secured financial backing • No technical mining skills • Lack experience and track record in mining • mine work plans with secured funding
PAMODZI FS (HARMONY) vs. PAMODZI ORKNEY & GROOTVLEI (AURORA) • Pamodzi FS under Harmony presents a classical example of our above recommendations • However, the Competition Commission struggled to understand why we were supporting Harmony albeit offering a lower purchase price but a sensible business and project plan which immediately re-employed 800 workers and remain employed to date.
PAMODZI ORKNEY • China - Africa Precious Metals (CAPM) offered R150m purchase price less replacement value of assets that disappeared from the Asset Verification Record. The purchase price is expected to be reduced by about R20m due to asset stripping and theft. • The Mine will be co-managed by CAPM and MEAC with a caution not to repeat the Aurora debacle where the mine was handed over to Aurora without the purchase price being paid.
PAMODZI ORKNEY • We are facilitating the temporary waiver of servitude and other surface rights held by AngloGold Ashanti (AGA) through a letter of comfort confirming that the sale transaction should proceed whilst these rights are being reconsidered. • A Memorandum of Understanding is being finalised between AGA and liquidators to allow the sale agreement to be concluded before the surface rights agreement is finalised. Transaction is expected to conclude soon as this is the only known outstanding condition.
PAMODZI GROOTVLEI • This mine was ‘bought’ by GoldOne for about R70m with a condition that they are going to prospect on new ground and abandon the current shafts as they are overly flooded • This is therefore a new prospecting right application and not a transfer of the current mining licence, which will probably take some time to conclude.
Legislative Intervention as a possible solutions • There is a need for change of Insolvency legislation • Liquidators are powers unto themselves and the Master of the High Court’s role is reactive largely as a result of protest from the unions and public outcry. • Liquidators’ reporting is erratic and they choose what and when to report and operate in a veil of secrecy. • We are compelling the state to be hands-on and introduce measurable reporting systems not to outsourcing this role to liquidators. • Government should introduce controls that will enable the role players to safeguard its interests.
Legislative Intervention as a possible solutions cont….. • Unions and creditors are kept in the dark and only get supplied sifted information which does not help in decision-making like whether an investor is fit and a proper person with funding and has correct business credentials. • Liquidators should not act on their own interest and not those of creditors. • Government should look at the pay formula for Liquidators, it needs to be regulated.
Legislative Intervention as a possible solutions cont…. • Stricter qualifications, rules and ethics regulating liquidators must be established. • Reporting guidelines should be designed for liquidators such that creditors know what to expect from them. • Reporting guidelines should include a business plan with a programme containing month to month milestones which should be achieved, failing which penalties should be imposedon liquidators.
