 JOHANNESBURG (miningweekly.com) - JSE-listed base-metals-miner Metorex said on Monday that it had agreed to dispose of its Consolidated Murchison (Cons Murch) antimony gold mine, after Bernard Swanepoel's To The Point (TTP) had proved the viability of the operation.
Metorex announced earlier that it would either close and rehabilitate the mine, or partially recapitalise the operation and dispose of it to an appropriate third party with the right management skills, expertise and access to further capital to render the Cons Murch operation sustainable.
Previously, Cons Murch had reported significant losses over an extended period of time. Swanepoel, who is the CEO of TTP, said that this was mainly owing to the mine losing its sole buyer of its product, falling commodity prices and undercapitalisation, which limited mining flexibility.
However, he told Mining Weekly Online that TTP had demonstrated the viability and profitability of the operation over the past eight months. "In the last few months, the mine has been able to report strong operating profit, even after capital expenditure. Cons Murch has really turned a corner."
In line with the agreement, Metorex would provide R65-million towards the recapitalisation of the mine, while TTP would contribute a further R20-million to ensure that the mine was well-capitalised going forward.
The disposal of Cons Murch would take place in a phased approach, owing to the mining rights that still needed to be converted and transferred. "Under the MPRDA [Mineral and Petroleum Resources Development Act], only new-order rights can effectively be disposed of, and this phased approach caters for the fact that the Cons Murch mining rights are still held as old- mining rights. Of course, we have applied for the conversion into new mining rights and are awaiting approval under Section 11 from the Minister," said Swanepoel.
During the first phase, TTP would take ownership of some of the Cons Murch assets, while also operating the mine. This part of the transaction would be concluded by mid-December.
Thereafter, the two companies would await the transfer of the old mining right, currently held by Metorex, to a new mining right. TTP has allowed a timeframe of up to three years for this process, but Swanepoel commented that it would hope for a faster conversion of between six and 12 months.
He also pointed out that the disposal would have a strong broad-based black economic-empowerment component. "Mineworkers have historically lost out on empowerment efforts, even post the release of the Mining Charter.
"With the new emphasis on broader black empowerment, TTP believes that there is no better place to start from than empowering your own employees. We will form an empowerment trust, whereby 26% of the company will be owned by the Cons Murch Black Economic Empowerment (BEE) Trust."
Meanwhile, Metorex CEO Terence Goodlace said that the recapitalisation and socially responsible disposal of Cons Murch represented the final step in Metorex's strategy to refocus the company operationally as a base-metals company.
"We are pleased to have concluded a transaction with TTP and that the existing employees at the operation would now have an opportunity to participate in the mine's future through the BEE Trust, which will have a 26% shareholding in the operations," he concluded.
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