JOHANNESBURG (miningweekly.com) – The bid for the entire Pamodzi Gold group had the potential to be concluded far faster than any of the other deals on the table and offered a significantly higher final amount of R1,7-billion, Pamodzi Investment Holdings executive director Kobus du Plooy said on Wednesday.

Du Plooy, who cofounded Pamodzi Gold with Ndaba Ntsele, told Mining Weekly Online that the China-backed group bid could be finalised "in less than two months" and was committed to a payout of R626-million immediately and to the redeeming of R1,7-billion worth of obligations "in a couple of years".

The "group solution" was faster, because the original Pamodzi Gold founders were already the holders of the mining rights, which meant no delay in the government's transfer of mining rights; and higher in value, because the sum of the current offers fell short of R1,7-billion.

Harmony Gold had offered R405-million for Pamodzi Gold Free State; Aurora Empowerment Systems R215-million for Orkney; and there were still no preferred bidders for Pamodzi Gold's East Rand and West Rand Mines.

He was grateful that the Standard Bank, the official adviser to the joint provisional liquidators - Enver Motala, Allan Pellow and Deon Botha - had agreed to study the group bid, which he believed addressed the needs of all stakeholders, besides preserving all the jobs.

"Our solution involves keeping the group intact, introducing the new cash of R626-million, and redeeming R1,7-billion worth of obligations over the next couple of years, using the cash generated by the business.

"Should our solution succeed, we believe that it would provide a lot more value for the stakeholders, including concurrent creditors and ordinary shareholders, than what the liquidated route will provide.

"We have a letter of intent, signed by the China Africa Development Fund, which is conditional upon due diligence and final approval, but all of that, including legal aspects and payout, will take less than two months.

"The agreements into which the provisional liquidators are entering have conditions precedent, which include the transferring of mining rights and the applying for Section 11 Ministerial consent, which can take six to eight months, delaying finality of the agreements reached.

"Our solution will be implemented far sooner and will provide better value to all stakeholders," Du Plooy said.

"The R626-million is the new equity going into the business to get all of the mines to be operational, and that's the key. The R626-million is not the total payment for the whole group, and the point at issue is whether liquidation will match the R1,7-billion.

"The Standard Bank, the adviser to the provisional liquidators, is currently going through our detailed group proposal, which is very comprehensive," he added.

The other misperception was that Pamodzi Gold had R1,5-billion debt for immediate repayment, whereas more than R1-billion of that was long-term debt, which would be payable immediately only if the business was liquidated.

"Last year, in September, the Industrial Development Corporation (IDC) sent a team to the mines and we asked them to do a zero-based due diligence.

"The IDC came back after five weeks and said that the mines needed R400-million, and invested R200-million. Since then, the IDC and the HyperVereinsbank have put in another R100-million.

"So R300-million has been invested and we are ready to invest another R626-million of new capital, so the number has risen from R400-million needed in September to R900-million, which is half a billion rand more than what the IDC estimated.

"We already have the licences and we don't need to apply. Out total completion will be in less than two months, including payment of funds, whereas nobody knows how long the alternatives will take, because they are dependent on licences, which have to be issued by government, and none of the deals can reach finality until the conditions precedent are finally met," Du Plooy said.

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