22 February 2024 | 04:01 PM

New funds come with strings attached

Key Takeaways

Despite assurances by embattled mining empowerment group Aurora Empowerment Systems that it has secured a new funder, it has emerged that the promised R725-million is far from a certainty.

A critical condition is that Aurora must list on the JSE before the funding, from Global Emerging Markets (GEM), will be released. Aurora is looking to reverse its assets into the shell of listed Labat to give it the listing it needs.

Aurora administers the mines of the liquidated Pamodzi Gold group but has been running on empty amid allegations of financial mismanagement. The Mail & Guardian has previously exposed questionable payouts to advisers of the mine who have dubious financial backgrounds.

Initially regarded as the saviour of the Pamodzi mines, Aurora has been unable to pay suppliers, and workers have not been receiving their full salaries.

On Thursday Aurora announced it had concluded a transaction worth R725-million with New York-based GEM. It said the deal provides that GEM can increase Aurora’s credit equity line to R1,45-billion.

GEM can also buy up to 40-million shares from Aurora when it lists on the JSE.

Aurora’s announcement came after it missed Monday’s deadline for proving to Pamodzi’s liquidators that it had the funding to continue administering the mines — failing which its management agreement was to be terminated.

Aurora’s initial funder, AM Equity, withdrew from the deal, amid concerns about Aurora’s management of the mine.

Michael Hulley, Aurora’s executive director, could not say when the funding would become available or when Aurora would list. He declined to comment on how questions about Aurora’s governance, provoked by investigations into its alleged pension funds transgressions, might affect the listing.

Regarding the controversial Bhana family, which acts as advisers to Aurora and has a history of insider share trading and VAT fraud, Hulley said: “We are not going to sit here and hang individuals out to dry.”

Aurora began to pay workers from last week and would pay more workers by the end of this week, Hulley said. But he could not guarantee that all the company’s debts to workers would be settled any time soon.

About 2 000 mineworkers at Aurora’s Grootvlei mine on the East Rand have been unpaid or only partly paid since February.

The M&G understands that the liquidators are dissatisfied with the information Aurora has provided on the GEM deal. A well-placed source said so many skeletons have emerged that the whole agreement should be forensically investigated.

But liquidator Enver Motala denied that there were any problems. “Every­one [was] informed at all times about what was happening,” he said. “We are all on the same page.”

GEM “are very credible people”, he said. “We are not dealing with another AM Equity here.”

Motala said the liquidators have not met to discuss the new funding proposal because they are waiting for documents from Aurora and GEM.

Liquidators were entertaining an offer from a Hong Kong consortium, Motala confirmed. The new kids on the block are the Hong Kong-based and listed gold producer Grand TG Gold Holdings Limited and its partner Virgile Mining, based in Welkom and headed by businesswoman Hettie Fourie.

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amaBhungane

Before joining the amaBhungane team in 2017, Micah was the national coordinator for media freedom and diversity at the Right2Know Campaign. He holds a Masters in African Studies from Oxford University and a BA Honours in History from Wits University.

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