JOHANNESBURG (miningweekly.com) - The shareholders of cash-constrained Pamodzi Gold on Thursday voted overwhelmingly in favour of the gold junior's R400-million capital restructuring plan.

Pamodzi Gold chairperson Ndaba Ntsele was able to announce in Johannesburg that more than 99,9% of the shareholders present or represented by proxy were in favour of the issue of 15 929 777 call options to financial institution Best Rock as part of a R200-million loan agreement.

This agreement, the company said, had been entered into between Pamodzi Resources and Pamodzi Gold, based on call options, which gave investors the right, but not the obligation, to buy shares at a specified price within a specific time period.

The company had announced last year that South Africa's State-owned Industrial Development Corporation (IDC) was the provider of the other R200-million.

The HypoVereinsbank (HVB) loan-agreement resolution had been excluded from voting because the agreement had still to be signed.

This potential agreement, which was still under negotiation, involved the possible issue of 14 483 144 call options to HVB, which would be on the same basis that Pamodzi Resources and the IDC were participating in Pamodzi Gold's loans structure.

A second option was for HBV to agree to an addition of 500 oz of gold a month being paid into the gold hedging agreement that Pamodzi Gold inherited in acquiring its East Rand mining operations at its inception.

Should HVB elect the second option, Pamodzi Gold would pay 3 000 oz a month into the hedge until 2012 completion date, 500 oz more a month than the current 2 500 oz.

Pamodzi Gold CEO Peter Steenkamp said that Pamodzi Gold had an undertaking from HVB that it would accept one of the two options put to it, which met the requirements of the IDC.

Steenkamp assured shareholders that the company now had the full R400-million in its banking account.

Ntsele said that Pamodzi Gold was attending to the concern of the JSE on the withdrawal of the HVB resolution and assured shareholders that the matter would be "satisfactorily resolved" with the JSE in the near term.

A shareholder present sought clarity on the waiving of the mandatory offer to minorities and was assured that there would be no obligation on him to sell his Pamodzi Gold shares. The waiving of an offer to minorities is associated with the company's upcoming R103-million rights offer.

New CFO Terry Moore, who was taking over from interim CFO Kobus Du Plooy, was present at the meeting.

Du Plooy assured shareholders that, as soon as the company had finality on the HVB transaction, it would inform the market.

The HVB deal would not add cash to the business, because it covered hedge obligations, and was therefore also not a cash drag on the business.

"Essentially it's a restructuring of the hedge, which would take all the pressure off the business to an extent of about 25% of the hedging. So it will really help the business a great deal, and that's what we are working at, " Du Plooy added.

Steenkamp said that the new business plan would be put to the board next week.

"We have a very robust plan and we are very confident going forward," he said.

"The funding package is sound and it is taking the company forward," Du Plooy said.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.