CHINA African Precious Metals (CAPM), which is affiliated to Hong Kong’s SSC Mandarin Holdings, is buying the liquidated Orkney gold mine in South Africa for 150 million rand (US$15 million). Orkney was an asset of Pamodzi Gold which went bankrupt in 2009 and had been given operational rights in the meantime.
Aurora Empowerment Systems, led by a grandson of Nelson Mandela and nephew of President Jacob Zuma, was ordered by the liquidator to vacate the mine in May 2013 as workers went unpaid.
The Chinese investors behind CAPM have agreed to a capital injection of R600 million (US$60 million) into the dormant mine for development and on erecting a new gold plant. The injection was approved by a meeting of shareholders in early November. The provisional liquidator said Orkney may be in full production a year from deal completion.
The first R200 million was expected to be drawn down following a scheduled meeting with the Department of Mineral Resources (DMR) by the end of November, when go-ahead was expected for underground dewatering and electrical repairs.
The 74% shareholder of CAPM is Golden Haven Limited, a subsidiary of Shanghai Pengxin, which is injecting equity capital into the company. The remaining 26% stake is owned by BEK Holdings, a 100% black-owned company, which gives CAPM its black economic-empowerment (BEE) credentials.
CAPM, which is already engaged with Hong Kong Stock Exchange for a listing, envisages a dual listing on the Johannesburg Stock Exchange once BEE-related part-listing impediments are removed.
With R220 million already invested in Orkney, the additional R600 million will be spent on two of the six remaining viable shafts to open the way for initial production at a monthly rate of 20,000 ounces. More investment will be required to return the remaining four shafts to production. All six shafts are expected to be fully operational in five years, which provides a production possibility of 80,000 to 100 000 ounces a month.
CAPM, which holds the mining licence following submission of a modified social labour plan to the DMR, is transferring ownership of Orkney mine’s land and buildings from Pamodzi. It has a worker recall agreement with the unions and re-engagement of 200 to 300 workers is anticipated in the first instance, building up eventually to between 2000 and 3000 when the mine is returned to steady state. Many of Orkney’s former mineworkers have remained in the mine’s hostels, with CAPM paying for water, electricity and sewerage costs.
Shanghai Pengxin also has a majority interest in a copper deposit in the Democratic Republic of Congo.