Gupta-owned mines placed under a management agreement
This article was originally featured on:city-press.news24.com
The Gupta-owned Optimum and Koornfontein mines have been given a lifeline due to a 12-month management agreement.
The company that came up with the best turnaround rehabilitation proposal for the mines was Burgh Group Holdings through its operations division Ezimbiwayo Consulting.
In a press briefing held at the Burgh Group Holdings in Sandton on Tuesday, senior business rescue practitioner Louis Klopper, who is tasked with turning around the two entities’ fortunes, explained what necessitated the management agreement.
Optimum and Koornfontein mines and coal terminal operations went under business rescue on February 20 as a result of the Bank of Baroda announcing its withdrawal from South Africa effective on March 31 explained Klopper.
“All efforts to secure transactional banking facilities for these entities were unsuccessful as the commercial banks remained concerned about their reputational risk… as a result, the business rescue practitioners entered into a management agreement with the Burgh Group Holdings,” said Klopper.
According to Klopper, Burgh Group Holdings’ Ezimbiwayo Consulting led by chairperson Dr Reabetswe Kgoroeadira and chief executive Quinton van der Burgh, both present at the announcement, was the only company that came with the best turnaround rehabilitation proposal for the two Gupta-owned mines.
Burgh Group Holdings’ Ezimbiwayo Consulting is, according to Klopper, “an aggregation of mining expertise and skills spanning across but not limited to: open cast mining, underground mining, logistics, coal beneficiation, project management, resources exploration and financial management of mining operations.”
Burgh was quick to point out that, “Ezimbiwayo consulting is currently operating 10 mines in the coal mining industry – soon to become 15 in June”.
This demonstrated the company’s competence and qualification in the role of providing the necessary services to the two mines under business rescue.
Klopper said: “Ezimbiwayo has been allowed access to the mines in order to render advice to the business rescue.”
The company found that the stockpiles could not be removed or traded due to the two entities owing substantial amounts to service provides such as Transnet Freight Rail which they owed R43 million, Richards Bay Coal Terminal to whom they owed R17 million.
Ezimbiwayo Consulting has then proposed the following turnaround strategy; the immediate sell of the stockpile which is estimated to result in a revenue of R135 million.
The first R35 million worth of shipment is already being trained for trading.
This revenue is expected to guarantee salaries and wages for workers at the two mines, attract contractors back on site, address the needs of critical suppliers as well as address material needs at the two mines.
The management agreements are expected to last for a 12-month period, after which the business rescue practitioners expect the mines to be rehabilitated and fully operational.