JOHANNESBURG (miningweekly.com) – Coal and chrome beneficiation and trading company Lurco Group is forging ahead with plans to take legal action against the sale of Koornfontein coal mine, with a new court date set for January 28, 2020.
Providing an update on the current status of the sale of the mine on Tuesday, the group noted that it had been forced to stand down following its court appearance earlier this month, owing to other court applications.
Junior miner Black Royalty Minerals (BRM) was selected by the Koornfontein business rescue practitioners (BRPs) as the preferred bidder of the mine.
Lurco pointed out that BRM's proposed acquisition price of about R300-million was R200-million less than Lurco’s bid.
Lurco began the journey to acquire the Gupta-owned mine – which was placed in business rescue two years ago – in February 2018.
After a lengthy process involving many business partners, the company finally submitted an independent bid which was accepted and awarded in October this year.
However, the BRPs required that the full purchase price for the Koornfontein assets be placed in a South African bank account within five days, which Lurco said was impossible owing to the South African Reserve Bank’s (SARB's) legal requirements.
Lurco co-founder and COO Aubrey Chauke said the BRPs had been aware that Lurco's funding was sourced offshore, as local banks were not willing to fund coal projects, owing to tightening emission standards.
“We mentioned to them that the condition they had imposed is impossible because of the SARB’s processes. Offshore money that is meant to fund projects of this nature normally take a minimum of six weeks to bring onshore.
“We expressed our concerns to the BRPs and they still insisted on the condition being met. We tried our level best to secure the funding locally and we were told that there is no way [that] we can bring it in,” Chauke stated.
The company then decided to seek legal relief. In its efforts to seek clarity around this “last minute requirement”, Lurco stated that its intention was not to punish the employees or BRM, but to ensure the best possible deal was struck to the benefit of all stakeholders.
“The employees will get 50c less [per rand] with the [BRM] deal, than what they would have gotten from us. When we submitted the bid, we were actually taking into account the employees that had not been paid in 12 months. We have offered them over R360-million,” Chauke said.
Responding to the allegation that the pending legal case is delaying the sale of Koornfontein and preventing employees from getting paid, Lurco maintains that even if its bid had been successful, the BRP process required that several legal proceedings be concluded before creditors and employees are paid out.
This essentially means that nobody would get paid this year in any case.
Lurco co-founder and CEO Ellington Nxumalo reiterated that the company had no connection with the previous owners of the mine – the Guptas – and that its main aim was to buy the mine and restore it to full, profitable operation.
“Coal reserves are shrinking in Mpumalanga and we are a business that is always looking for coal assets. That is the reputation that we have developed locally and abroad. Our team collectively has over 200 years of experience in the coal sector [and] can deliver coal to State-owned power utility Eskom as well as the export market,” he noted.
The company pointed out that its relationship with the bidders, BRPs and the appointed liquidation agency managing the sales process, GoDoveLive, remains healthy and professional and that it remains open to engagement.