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Africa|Business|Mining|OPENCAST|Underground
Africa|Business|Mining|OPENCAST|Underground
africa|business|mining|opencast|underground

Afrimat seeks to have Nkomati anthracite mine placed in business rescue

6th October 2020

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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Openpit mining company Afrimat has lodged papers in the High Court of South Africa, Gauteng Local Division, in Johannesburg, asking for Nkomati Anthracite to be placed under supervision and to start business rescue proceedings.

Unicorn Capital Partners (UCP), in which Afrimat holds a 27.27% stake, indirectly holds 60% of the issued shares of Nkomati, which operates an anthracite mine focused on both opencast and underground mining.

Afrimat CEO Andries van Heerden says the legal step was necessary to protect the interests of Nkomati's employees, the local communities and creditors.

Upon a request by UCP, Afrimat provided unsecured working capital funding to Nkomati during the period from April to July.

“We agreed to an extension of the repayment of certain tranches which were due and repayable. Nkomati has, however, to date been unable to settle these loans,” Van Heerden says.

As a creditor, Afrimat is in a position to ask for Nkomati to be placed into business rescue.

“We cannot continue to provide additional funding on an unsecured basis. At Afrimat, we work closely with communities around our mines and take great pride in our staff relations and staff development."

The legal steps taken make it possible to securely inject post startup financing into the mine and prevent liquidation of the mine, Afrimat notes.

Van Heerden says recent production disruptions owing to Covid-19-related shutdowns and an extended illegal strike have placed the mine "in extreme difficulty".

He adds that Afrimat remains of the view that, should the application be granted, the mine and the associated jobs will be saved.

He notes that Afrimat wishes to acquire a bigger stake in the mine to build up its bulk commodities segment.

He informs that Afrimat is prepared to inject post-start finance into the structure once the business rescue process is in place, with such finance enjoying preference, as to repayment, as contemplated in terms of Section 135 of the Companies Act.

Afrimat, through a scheme of arrangement, made an offer to UCP for the remaining shares it does not already own. The circular was distributed to UCP shareholders on September 9.

The business rescue application does not impact the scheme, the general meeting of which will proceed on October 9. Conditions precedent as well as shareholder approval need to be met and obtained.

“We still believe fully in the value that Nkomati can add to the diversity of the bulk commodity portfolio within Afrimat, but as stewards of shareholder money and to maintain the alignment of interests, we have to ensure that a fair and equitable process is followed and our interest and the jobs, are protected,” Van Heerden says.

“I am confident that future employment prospects in the surrounding community will be available and the business rescue will result in a better return for Nkomati’s creditors,” he adds.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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