JOHANNESBURG (miningweekly.com) – The business rescue of ferrochrome producer Hernic Ferrochrome has not yet impacted AltX- and Aim-listed Jubilee Platinum’s platinum and chrome operations in the North West province, Jubilee CEO Leon Coetzer assured shareholders on Thursday.
Following a comprehensive assessment of financial alternatives by Hernic's directors, the operation entered voluntary business rescue on September 21 in an effort to restructure some its business activities.
“Jubilee is very accustomed to operating within this business process. We have already engaged with Hernic to offer our services wherever appropriate within this process.
“As far as the company is concerned, it is business as normal,” he assured.
Jubilee currently processes arisings stemming from Hernic’s mining operations and platinum-containing material from the vast surface stocks.
Normal operations are expected to continue for the foreseeable future, with stable chrome market conditions persisting.
“We continue to be buoyed by our overall results and progress at our Hernic platinum and chrome operations and have, over the past week, achieved production levels in excess of 1 900 t/d of feed material, moving towards a robust operation,” Coetzer added.
“Under current stable market conditions and the availability of cash within and accruing to Hernic, it is anticipated that Hernic should be able to continue with the normal business operations for the foreseeable future. This is however subject to an assessment by the practitioners,” Hernic further elaborated in its business rescue notice.
Hernic’s majority shareholder and lender Mitsubishi Corporation said on Friday that the business rescue was not expected to have any material impact on the consolidated earnings of Hernic for the period ending March 2018, despite facing financial distress.
The business rescue document noted that Hernic was currently not in a position to pay its debts as they become due and payable within the next six months, in particular a significant payment of the disproportionate funding owed to Mitsubishi.
Mitsubishi notified Hernic that it is expected to be in breach of certain conditions of its credit facility by April 1, 2018, which meant that the facility must immediately be repaid upon breach.
The business rescue, however, presents an opportunity for Hernic to assess its options under a moratorium that suspends all payments to creditors.
Petrus van den Steen and Trevor Murgatroyd have been appointed as the joint business rescue practitioners.
Hernic employs about 690 permanent employees and 1 600 service provider employees, operating two chrome mines able to produce up to 1.5-million tonnes a year.
However, one shaft is currently on care and maintenance owing to the economic downturn.
Hernic operates four ferrochrome furnaces with a capacity of 420 000 t/y.