JOHANNESBURG (miningweekly.com) – JSE-listed gold junior Simmer & Jack (Simmers) on Friday reported that a process was under way to recruit new independent nonexecutive directors and said it would welcome a ‘fronting’ investigation by the Department of Mineral Resources (DMR).

Last month, Simmers announced the resignation of independent nonexecutive director Kevin Wakeford and nonexecutive directors Siviwe Mapisa, Baba Njenje and Ayanda Sisulu-Dunstan, all three of whom are directors of black economic empowered Vulisango Holdings.

The resignations came in the wake of a shareholding dispute between Vulisango and Simmers.

Vulisango was demanding that Simmers restored its interest in the company to 26%, after its shareholding was diluted to 22% through various capital raising exercises.

Nonexecutive chairperson Nigel Brunette claimed on Friday that Vulisango had asked the DMR to call Simmers’ mining rights into question, unless the black economic-empowerment (BEE) company held a minimum stake of 26% and was the only recognised BEE owner in Simmers.

He said that Simmers had sought a legal opinion on Vulisango’s assertions, which indicated that mining rights could not be based solely on its relationship with Vulisango.

Recent media reports also suggested that the DMR would probe claims that Simmers used its BEE partner as a front to obtain mining rights.

A department spokesperson reportedly said that it was concerned about the effect that the continuing dispute at Simmers would have on empowerment in mining.

“Simmers welcomes any investigations that leads to a speedy resolution on this matter. We are comfortable that Simmers meets and exceeds the requirements of the Mining Charter based on legal opinion obtained on the application of the Minerals and Petroleum Resources Development Act (MPRDA),” Brunette said in a shareholders statement.

OPERATIONS

On the operational front, the company’s focus would remain on the delivery of its four major growth projects, namely the rehabilitation of Buffelsfontein gold mine’s high-grade five shaft, the integration of Tau Lekoa and ramping up of gold and uranium production at Mine Waste Solutions and Ezulwini mine.

“Arguably one of the most exciting new growth projects is Weltevreden, which is the shallow up-dip extension of the Tau Lekoa mine. This development presents substantial upside for Simmers, with the potential to almost double Tau Lekoa’s current production profile and create around 1 000 new jobs in the medium term,” said Brunette.

Brunette added that Simmers was in the process of restructuring its gold division to mitigate the combined impact of the weak rand/kg gold price and higher-than-expected increases in the cost of fuel, energy and mining consumables. Once this was completed, the company would be well placed to deliver on its promises.

“We have a clear obligation to all our shareholders, Vulisango included, to produce the goods, on budget and according to plan. By achieving this, we will prove our detractors wrong and the simple act of delivery will go a long way to unlocking the value inherent in the company.”

Simmers noted that it would continue to bolster its corporate and capital structure in support of the company’s growth ambitions to unlock value and deliver shareholder returns.

“We will continue to pursue the value unlock opportunities available to us between First Uranium and Simmers, particularly with regard to the financial and technical synergies which could be very beneficial to both companies. We remain committed to the principles of BEE and the spirit of the Mining Charter.

“We have made good progress and, according to the criteria used by the DMR to measure a company’s ownership by historically disadvantaged South Africans, Simmers scores 42%, well above what is required under the MPRDA. On the same basis, First Uranium scores 22,5%,” Brunette concluded.

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