No glitter in ‘River Ranch’ diamonds…Final liquidation appears only way forward…Miner sitting on estimated $162m reserves

03 Nov, 2017 - 00:11 0 Views

eBusiness Weekly

Golden Sibanda
Beitbridge-based diamond mining company, Limpopo Mining Resources, formerly River Ranch, has failed to secure buyers for its assets five years after the company went into liquidation despite sitting on an estimated $162 million worth of gems.
Without any firm offer within the horizon, Limpopo Mining Resources’ Dubai based majority shareholder Rani Investments might need to wait for an undefined period to have its $21 million claim settled.

The liquidator of the company said the defunct mining entity, whose operations were mothballed in 2012, was now in final liquidation. Sources said the company’s failure to declare dividends in a long time resulted in endless shareholder squabbles, which some say was the final nail on its troubled operations.

Limpopo Mining Resources owns 80 percent of the diamond mine held equally between its subsidiaries Cornerstone Investments and Sedna Limited, while Khupukile Resources owns the balance of 20 percent. Liquidator Winsley Militala of Petwin Executor and Trust Company told Business Weekly that the search for buyers of the mine’s assets was ongoing with no serious buyer in sight yet.

He, however, said there was no price tag on the mine’s assets, “but naturally any potential buyer should make an offer, which if I cannot deal with I can seek direction from a stakeholders’ meeting.”

Militala said his duty is to find a buyer of the assets and not an investor as is mostly the case with a judicial manager. However, it looks increasingly hopeless a buyer may be found soon.

Estimated to be sitting on ore reserves totalling 9,8 million tonnes worth about $162 million, River Ranch (Limpopo Resources) has failed to find the glitter that lures serious buyers. The fact that the company has assets valued at just $5,6 million against creditors of over $21 million, probably explains why no buyer has expressed interest and acted on such expression.

The closed mine’s financial record also depicts the financial mess the company had fallen into. Between 2009 and 2011, the company registered an accumulated loss of $6,5 million.
“It is normal for transactions of this nature to take longer. Any potential buyer must satisfy himself through investigations and due diligence that there is value for money before commitment.”

A number of firms have previously made expressions of interest, but nothing concrete came out of it. One firm toured the mine, Mwenezi Exploration, with a view to purchase.
“All these firms have been requested to put their offers in writing and at the time of concluding this report nothing had been received,” Militala said in his last report to stakeholders.

The main reason for the company’s failure can be attributed to undercapitalisation; as it relied solely on a shareholder support for its operations.
Illustrating the company’s dire financial needs, the liquidator said shareholder support over the years rose to a $21 million.

Share This:

Sponsored Links

Survey


We value your opinion! Take a moment to complete our survey

This will close in 20 seconds