Initial successful bidder fails to secure funding
Black empowerment company Makole Group this week took a major leap in its quest to be a diversified South African mining company in key commodities after it acquired the Gupta’s Koornfontein coal mine (KCM) in Mpumalanga.
There were three initial successful bidders for the purchase of the KCM – Lurco, Orchid Mining Consortium and Black Royalty Minerals (BRM) – which is owned by Makole. BRM paid R300m for KCM, R200m lower than Lurco.
KCM’s creditors last month voted in favour of the Lurco bid, subject to the consortium confirming capital funding for the purchase no later than October 25.
However, Lurco failed to raise the necessary capital to clinch the deal.
Aubrey Chauke, COO of Lurco, said the business rescue practitioners had been unfair on the group. “Our funders are offshore and everybody knew about that.
Had we known earlier about the condition that we would be required to have the capital in a South African bank account, we would have made the necessary arrangements,” he said.
“It’s not the end of the matter for us. We have written to the business rescue practitioner (BRP), informing him the deadline imposed on us was impossible and we are weighing our legal options.”
BRP for KCM Louis Klopper rubbished Lurco’s accusations: “In terms of the law, we (BRPs) have to take instructions from the creditors so it is not for us to prefer any bidder over the other. Creditors take their decisions and we implement.”
KCM’s creditors had also selected BRM as the second successful bidder in the event Lurco did not provide proof of financial funding.
BRM had already confirmed capital funding in its bid. Makole Group CEO Ndavhe Mareda said: “From the time BRM started operations at
the Chilwavhusiku Colliery in Bronkhorstspruit in January 2018, we have strategically focused on expanding our operational footprint.
“The bid for Koornfontein coal mine is aligned with our existing focus and expansion strategy, which combines local operations with a strong export component.”
Koornfontein, one of Eskom’s main coal suppliers before going belly-up last year, was placed under business rescue in February last year after the Gupta’s Tegeta ran into financial difficulties.
Koornfontein’s mine assets include an open-pit strip mine and two underground areas (Gloria and Blinkpan) – a processing plant capable of processing 3.5-million tonnes per annum.
Mareda said he expected operations at the Koornfontein mine to begin in the first three months of 2020.
By Kabelo Khumalo