South African state-owned diamond mining company, Alexkor is trading “recklessly” and failing to meet its financial obligations, according to local media reports.
The miner’s administrator Lloyd McPatie said in a briefing to a Parliamentary Portfolio Committee on Public Enterprises that Alexkor was set to run out of cash by June, following a loss of R63.5-million ($3.6 million) in 2019.
Image credit: Alexkor
Alexkor’s core business is diamond mining around Alexander Bay and its non-core business includes residential and community services.
"It was not a going concern when I walked in, and it's still not a going concern," McPatie was quoted as saying by Fin24.
"The company is not a going concern. It can't generate cashflows."
McPatie proposed that a new recapitalised entity be established to own and manage the Alexander Bay mine.
The administrator said the Pooling and Sharing Joint Venture (PSJV) between Alexkor and the Richterveld Mining Company, which includes the Richtersveld community, was also technically insolvent and could not trade itself out of its current financial situation.
Alexkor owns 51% of the mine, in Richtersveld, in the Northern Cape while the remaining 49% was owned by the PSJV.
McPatie, who was appointed in mid-2019 to review the contract mining and revenue sharing models between the PSVJ and the contractors, said the entity only had one geologist, which was not normal for a mining operation.
He said PSJV should at least have a metallurgist, a surveyor and a mineral resource manager appointed as well.
The option of liquidation of the PSJV was proposed to government last January, but this was depended on the Communal Property Association being properly constituted, which McPatie said it was not.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
