JOHANNESBURG (miningweekly.com) – Chinese investors have agreed to a capital injection of R600-million into the dormant Orkney gold mine, bought out following the liquidation of the former JSE-listed Pamodzi Gold. 

China African Precious Metals (CAPM) executive director Elias Khumalo said on Monday that the amount of R600-million had been approved at a meeting of shareholders in Shanghai last week.

“Regardless of the strikes that we’ve had in the mining industry, their commitment has not been shaken,” Khumalo told Mining Weekly Online in a video interview.

The first R200-million is expected to be drawn down following a scheduled meeting with the Department of Mineral Resources (DMR) in two weeks, when go-ahead is expected for underground dewatering and electrical repairs.

CAPM bought the mine out of liquidation for R150-million in 2011. The 74% shareholder of CAPM is Golden Haven Limited, a subsidiary of Shanghai Pengxin, which is injecting equity capital into the company.

The remaining 26% stake in CAPM is owned by BEK Holdings, a 100% black-owned company, which gives CAPM its black economic-empowerment (BEE) credentials.

CAM, already engaged with the Hong Kong Stock Exchange for a listing, envisages a dual listing on the Johannesburg Stock Exchange (JSE) once BEE-related part-listing impediments are removed.

“By precluding us from listing for fear that we will dilute the 26% BEE ownership, it simply means that the BEE component does not have an opportunity to raise equity.

“We want to increase our stake to 35% but our ability to raise funds is impaired by the legislation. You can’t tell investors to only buy the 74% portion of CAPM and not the 26% BEE portion because it belongs to black people. We have engaged with government at different levels and I am sure that within a year or two, they will be able to deal with the issue,” Khumalo told Mining Weekly Online.

In a separate transaction, BEK is also partaking in a one-million-hectare, R2-billion agricultural project with the Pengxin group, which is scheduled to be piloted next week on an initial 50 000 ha of ground in Kwazulu-Natal.

Pengxin owns other agricultural projects around the world, including one in New Zealand.

With R220-million already been invested in Orkney, the additional R600-million capital will be spent on two of the six remaining viable shafts to open the way for initial gold production at a rate of 20 000 oz a month.

More investment will be required to return the remaining four shafts to production.

All six shafts are expected to be fully operational in five years, which provides a production possibility of 80 000 oz to 100 000 oz a month.

CAPM, which is the holder of the mining licence following the submission of a modified social labour plan to the DMR, is in the process of transferring ownership of Orkney mine’s land and buildings from Pamodzi.

CAPM has a worker recall agreement with the unions and re-engagement of 200 to 300 workers is anticipated in the first instance, building up eventually to between 2 000 and 3 000 when the mine is returned to steady state, under GM operations Louis Lamsley.

Many of Orkney’s former mineworkers have continued to stay in the gold mine’s hostels, with CAPM paying for water, electricity and sewerage costs.

The diversified Shanghai Pengxin also has a majority interest in a copper deposit in the Democratic Republic of Congo.