JOHANNESBURG (miningweekly.com) – The latest R626-million "expression of interest" for the entire Pamodzi Gold group was not only "inadequate" and "not in the interest of creditors", but might result in "further protracted delays" and had "no binding effect", liquidator Enver Motala said on Wednesday.

Believed to be Chinese supported, the R626-million offer was made by Pamdozi Gold founding chairperson Ndaba Ntsele.

Motala said that the offer contained several "conditions precedent" and was "inadequate" in that the collective bids for the Pamodzi Gold's Free State, Orkney and the East Rand assets would far exceed the R626-million, which had been further dissected down, into a loan of R400-million and equity of only R226-million.

The bid thus placed a value of only R452-million on the entire group assets, which had debt of over R1,5-billion.

More than R600-million had already been secured for the assets of Pamodzi Gold Free State and Pamodzi Gold Orkney, and Pamodzi Gold East Rand was also expected to realise a substantial additional amount, rendering the R626-million inadequate.

The joint provisional liquidators had, thus, committed themselves to finalising the various agreements with Harmony Gold, which had bid R405-million for Pamodzi Gold Free State alone, and would follow up with an announcement on Orkney, before making an announcement on the East Rand assets.

Motala said that the liquidators were at an advanced stage of concluding the formal agreements with the JSE-listed Harmony, which had been chosen as the preferred bidder.

He said that the major secured creditor, the State-owned Industrial Development Corporation (IDC), as well as the National Union of Mineworkers (NUM) and Solidarity, had supported the bid from Harmony.

"The future sustainability of the mine is paramount and Harmony is the most suitable operator to ensure long-term sustainability and stability," Motala said.

The liquidators, he said, had embarked on a transparent bidding process in consultation with the Standard Bank, and all prospective offerors had been given every opportunity to submit a valid bid.

The criteria in selecting the preferred bidder included the submission of social and labour plans for the area; the empowerment credentials; long-term sustainability; the re-employment plan; satisfactory proof of funding; the implementation of a strict environmental rehabilitation plan; and a fair market-related price for the assets.

"All of these criteria are in the best interests of the general body of creditors, and particularly the many destitute employees who are the most vulnerable," Motala said.

The liquidators of Pamodzi Gold Orkney would shortly announce a preferred bidder for the acquisition of all the Orkney assets, at a sale price of more than R200-million.

A salient feature of the offer was that all the permanent Pamodzi Gold Orkney employees would be reemployed and there would be no retrenchments of any permanent employees.

The preferred bid would be subject to formal acceptance by the IDC, NUM and minority labour union, United Association of South Africa.

The offer had been structured to be most advantageous to the general body of creditors and the employees and incorporated commitment to invest R150-million capital on the short- to-medium-term to ensure sustainability.

As soon as a formal announcement had been made, the liquidators would proceed "with haste" to conclude the agreements.

The liquidators of Pamodzi Gold East Rand were assessing indicative bids and an announcement would be made in the "next few weeks".

The East Rand preferred bid would be subject to formal approval from the major secured creditor, the HypoVereinsbank of Germany, which was the holder of the hedge agreement.

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