Gold One enter acquisition agreement with Pamodzi Gold liquidators
Gold One International and its JSE listed subsidiary, Goliath Gold will buy certain surface assets and data from the joint provisional liquidators of Pamodzi Gold East Rand
JOHANNESBURG (MINEWEB) -
ASX and JSE listed miner, Gold One International Ltd and its JSE listed subsidiary, Goliath Gold Mining Ltd, have entered into a R70m (US$9m) acquisition agreement with the joint provisional liquidators of Pamodzi Gold East Rand Pty (Ltd) to acquire certain surface assets and data.
The deal's success hinges on the Department of Mineral Resources (DMR) giving the go-ahead for Pamodzi to drop its conversion applications in respect of its existing old order mining rights and a simultaneous lodgement and eventual granting of new prospecting rights being awarded to Gold One's subsidiaries.
The rationale behind this swapping of rights is to ring fence the rehabilitation liabilities associated with all the historical mining efforts that have taken place over the years at the operations.
If successful, this would effectively reduce Gold One's exposure to only the rehabilitation associated with the specific surface assets purchased said Gold One, CEO, Neal Froneman. He estimates that this would amount to approximately R10m (US$1.3m).
"If you have a mining licence you are responsible for the old liabilities. If you have a prospecting licence then you are only responsible for your liabilities going forward so we can control that" said Richard Stewart, Gold One's senior vice president for business development.
The structure surrounding the deal is that Gold One's subsidiary, New Kleinfontein Goldmine (Pty) Ltd (NKGM), would pay R65m for surface assets that would include the metallurgical plant, number 4 shaft complex and the offices on the Grootvlei property. NKGM will also apply for the prospecting rights contiguous to its existing Modder East mine.
Gold One's 71% controlled subsidiary, Goliath Gold (GG), which is effectively Gold One's listed exploration arm, would pay R5m to acquire historical mining and technical data from the Pamodzi East Rand Operations (PERO) which comprises Grootvlei, the Consolidated Modderfontein Mines, and the Nigel Gold Mining Company.
The areas included under the deal effectively link up the Modder East operation in the North of the East Rand Basin with GG's 50 kilometres of underground mapping in the south of the basin although Froneman said that the idea would be to look at replicating its Modder East success (i.e. start completely new mines) rather than trying to resolve the problems associated with the already flooded areas.
Froneman said that exploration activities would look at delineating the down-dip extension to its Modder East operation that can be accessed using Modder East's existing infrastructure without running into the flooded historical voids and that GG would focus on shallow exploration opportunities over the remainder of the area acquired.
This is not, however, immediately good news for the workers previously at the mine. It will take a substantial amount of time to completely model and design these new mines in order to determine the viability thereof before the stranded workers, are likely to find re-employment.
"At the moment, unfortunately with us not re-opening mines, we cannot offer opportunities [for employment]. What we have agreed to, of course, with the unions who we've had extensive discussions with is that in the event that we do get back into production there will obviously be recall and priority given to the ex-workers of this region. We have clearly committed to that but, it will take 3 to 5 years, so we can't put a number to it and say that we can afford to employ x amount of people tomorrow" said Stewart.
A non-refundable deposit of R0.5m and R6.5m would be paid by GG and NKGM respectively, on signature of the acquisition agreement in order to assist the liquidators Froneman said.
The balance would be due on the granting of the new order prospecting rights and the delivery of the surface assets. The deal also makes provision for Gold One to take occupation of the surface assets on signature of the deal so as to put security in place to safeguard the assets.
A deal of this magnitude would not normally receive much attention but due to the dubious past of the assets being acquired the press conference was well attended.
The previous owner of the assets, Pamodzi Gold Ltd (chaired by a recipient of an entrepreneur of the year award and recently elected president of the Black Business Council, Ndaba Ntsele) went into final liquidation in 2009. Politically connected company, Aurora Empowerment Systems, stepped in and took control of the now defunct assets.
A drawn out and unsuccessful process followed, resulting in the liquidator, Enver Motala, and Aurora finally being removed after none of the promises to revive the mines materialised. Aurora has also subsequently been placed under final liquidation.
Gold One's share price was largely unchanged during the day but the JSE system was experiencing system disruptions making it difficult to see if the announcement of the deal was having any impact on the share price.