eBusiness Weekly
Fidelis Munyoro
The country’s former largest gold producer, Metallon Gold Zimbabwe’s— Mazowe and Shamva mines — have been placed under “rescue” administration after Associated Mine Workers Union of Zimbabwe (AMWUZ) successfully sought a High Court order for reconstruction of the two mines.
Metallon has been facing a myriad of challenges after sinking to new low-slung amid reports the gold mining conglomerate had been neglected by its shareholder-Mzi Khumalo.
Mazowe Mine is one of the oldest mines in Zimbabwe.
Justice Tawanda Chitapi, granted the application by AMWUZ and appointed Mr Reggie Saruchera of Grant Thornton Zimbabwe interim corporate rescue administrator of the two mines.
He will be deputised by Mr Cecil Madondo of Tudor House Consultants, ruled the judge.
“The first and second respondent are hereby placed under supervision and corporate rescue proceedings in terms of section 124 (1) (a) of the Insolvency Act and shall be subject to supervision, management and control as provided for in the said Act,” reads a ruling by High Court Judge Justice Chitapi.
“The corporate rescue practitioners shall carry out their duties in accordance with the relevant provisions of the Insolvency Act and shall be entitled to be remunerated in terms of Section 136 of the Act.”
Though Metallon Gold did not really show evidence proving that its two mines are financially distressed, it failed to place information before the court from which the court could determine that in the ensuing six months from now the companies would be able to pay their debts or not become insolvent.
And Justice Chitapi remarked that other than to cry that corporate rescue would adversely affect the management plans for revival of production of the mining entities and that the practitioner would levy fees which erode further the companies’ resources, there was nothing of real substance pleaded to persuade the court that the respondent’s companies were anything other than proper candidates for corporate rescue.
“No details of revival plans were placed before the court. The argument proffered against corporate rescue were not backed by any facts,” he said.
Justice Chitapi said corporate rescue in any event will shield the company from predatory creditors so that the company gets back on feet.
The ruling also means the company property is temporarily made immune against adverse claimants while the restructuring plan in which the interested parties participate is put in place to maximise the likelihood of sustaining the company.
The court also threw out the respondents’ further argument that control of the company would be taken away from management and the company owners saying this was a selfish argument which fails to take into account of the greater good which is that corporate rescue is not a hostile takeover of the company but to sustain it.
“For management and shareholders to seek to cling to control of the companies when clearly they have failed to sustain the companies and the companies have virtually collapsed is being irresponsible in the extreme,” he said.
The judge also found again limping, further argument that the corporate rescue practitioner will further erode the companies’ resources in charging fees.
He said fees charged are set out by law. Instead of worrying about fees which the corporate rescue practitioner will charge, Justice Chitapi said, the respondents should focus on the revival of their operations through the corporate rescue.
He said its success will ensure that they become the ultimate beneficiaries.
The ruling did not go down well with the Metallon Gold group, which has since filed a notice to appeal the entire judgment.
Metallon has four mines under its portfolio — How Mine, Mazowe, Shamva and Redwing mines. Exploration and development dates back to 1890, with over 1.4 million ounces of gold produced to date.
The mine comprises two underground operations, Mazowe and the BSV sections. The mine has 247 claims over 2,939 hectares of landholding.
The ore is processed in a single plant that consists of conventional crushing and milling, and a carbon-in-leach facility.
