African Copper Mining’s subsidiary liquidated

Nicholas Mokwena
Thursday, 07 January 2016
Walter Mushi Walter Mushi

Lobatse High Court has made a final order to place under liquidation Messina Copper Botswana Pty Ltd – a subsidiary of African Copper Mining - after the company failed to fulfill contractual payment obligations to Diesel Power Mining.

Diesel Power Mining had petitioned the court to have Messina Copper Botswana liquidated for delayed payments. Lobatse High Court Judge Abednego Tafa confirmed and made final the provisional order of winding up of the company in the hand of the Master of the High Court. Messina Copper Botswana Pty Ltd did not object to being placed under the hammer. Through its lawyer Gorata Dibotelo, the company agreed to the final order made by Justice Tafa last week Friday.

Dibotelo confirmed to the court that her client is not opposed to the provisional order being made final. Appearing for Diesel Power Mining Walter Mushi told the court that adverts were placed on newspapers regarding the provisional liquidation “and no one has come forward to object to the order being made final as per the rule nisi issued by the court last month.”

Justice Tafa ruled that subject to a finding of proof of publication of the order of the 13th November 2015, the order will be made final. He said the petitioner may not uplift the order until they have filed proof of publication, which the petitioner promised to file on that same day.

A statement released by Diesel Power’s JSE-listed parent company, Buildmax, revealed that a provision against the debt is likely to affect the company’s 2016 financial results by up to R90 million.  It said Diesel Power Botswana’s current aggregated exposure to Messina Copper Botswana is approximately P47 million.

African Copper through its subsidiary Messina Copper Botswana Pty Ltd awarded a long-term contract to provide hard-rock open cast mining services to Diesel Power Mining Pty Ltd a subsidiary of Buildmax Limited in respect of African Copper’s existing open pit copper mining operations at Thakadu and Mowana mines.

The $112.7-million (about P1 billion) contract, which started in February 2014 and had duration of 52 months, would see Diesel Power undertake mining activities at Thakadu for the first four months before moving to Mowana Mine for the remaining 48 months.

The scope of the contract outlined the application of conventional open pit mining and drill, with the majority of the required $18-million mobile plant and equipment to be sourced from the existing Buildmax fleet. All required asset-based funding were to be jointly funded by Diesel Power and a third-party financier. Under the terms of the contract, Diesel Power would deploy a “highly-qualified” management team with extensive experience in Africa, while Buildmax would establish permanent support structures at the Mowana Copper Mine.

Minister of Minerals, Energy and Water Resources, Kitso Mokaila recently told Parliament that since the economic downturn in 2009, Mowana Copper Mine has been struggling to keep a positive cash flow, which prompted government to defer royalties in order to sustain the mining operation and avert closure. He said operations at Thakadu Mine have been suspended since February this year and since October at Mowana Copper Mine.

“Mowana Copper Mine has been receiving support from its shareholders through funding and guarantees to help them meet liabilities. The mining contractor at Mowana Copper Mine, Diesel Power Limited suspended operations on 10th October 2015 citing delayed payments as reasons. Mowana Copper Mine then submitted a payment plan to Diesel Power Limited, however the plan was rejected and the contractor approached the court for intervention to liquidate Messina Copper”, he said.

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