Tick tock: Aurora sits on timebomb

It is another desperate race against time for several crisis-hit gold mines as their owner, Aurora Empowerment Systems, fights to meet an April 30 deadline to secure funding.

Aurora's acquisition of the mines out of the Pamodzi Gold liquidation in the latter half of last year and its promise to save them, appeared to end in a similar late dash as Pamodzi sank.

But, just months later, the mines are not operating, mass retrenchments are under way and workers are on strike.

Aurora - whose chairman is Khulubuse Zuma, the nephew of President Jacob Zuma, and whose managing director is former president Nelson Mandela's grandson, Zondwa Mandela - now has less than two weeks to find about R1-billion.

Should it fail, the mines could have their third new owner in less than a year as Chinese investors wait in the wings.

Enver Motala, a joint liquidator of Pamodzi Gold, the previous owner of the mines, said he had set the end of April as the deadline for Aurora to find funding, but he has put a plan in place should the deadline not be met. It is understood that Aurora's potential funder is a US-based private equity firm, while liquidators are also speaking to an unnamed Chinese investor.

Aurora's successful R215-million bid for Pamodzi's Orkney mine and R390-million bid for its East Rand operations, which included provision for significant additional capital injection, was made based on funding from Malaysian funder AM Equity that did not materialise.

Motala said liquidators had investigated what went wrong, and did not get adequate answers from AM Equity, which said there were "internal issues with Aurora".

Motala said the collapse of Aurora's plans was simply a function of it running out of money and the funders not coming through. "Up to December, it was running well, but we started noticing cash-flow difficulties towards the end of January."

Asked why the liquidators had chosen Aurora, which had no mining experience and, as it turned out, no money, Motala said: "We had nobody else. Harmony was not interested. AngloGold was not interested, and among others who were, they could not come up with the funding".

Asked if the Aurora bid had been naive, Motala said: "No. They are youngsters, they saw the opportunity to acquire a mine, but they relied on only one funder."

However, a mining industry source said experience was the key. "If you have assets which have gone out of business, you need somebody with good mining experience, somebody who understands the legalities of getting mining licences because old mines are difficult to start up again."

Whatever the problems or the fault, the result has been tragic. The mines are idle and Aurora is slashing jobs. It continues to not pay or delay payment to workers - it has now paid to the end of February following industrial action - and its water and electricity supplies have been cut.

National Union of Mineworkers (NUM) spokesman Lesiba Seshoka said members felt betrayed by the scions of the presidential families after months of "empty promises". He said the union had objected when Aurora was chosen on the basis that it lacked prior mining experience.

"By the look of things, the liquidators were more impressed by their surnames," Seshoka said.

Solly Phetoe, Cosatu general secretary in the North West, said he met with Zondwa Mandela on March 1 and warned him that they would have to keep their promises. "I told him that the surname was not going to work here," Phetoe said. "Our members are going to strike until their demands are met and we still say if Aurora are not prepared to pay workers, they can go to hell."

Commercial director Thulani Sheshile Ngubane said Aurora had found funding and was waiting to complete the first draft of contractual agreements. "We are busy finalising it and hope to have a press conference on Monday."

However, nothing has been signed. "There is nothing on the table. But they (the potential funders) have come here and done due diligence." Ngubane lashed out at workers, saying that "having people doing industrial action is not going to help the company".

"The way that we stand now, we are not operating and we cannot attract an investor, so we have to rightsize. It is crucial to show investors that their money will be used to produce profit. At the moment, we are losing R30-million a month.

"We cannot produce unless we have funders in place. We need to turn around these mines so that any investors see we are not running a charity organisation."

Aurora has been criticised for chasing other deals while its mines are in crisis. It is concluding a deal to buy Labat Africa (a vehicle for a JSE listing) and previously announced deals to buy Redwood Timbers, Cenmag and a majority stake in Blyvooruitzicht, but most have failed.

Ngubane said Aurora was not chasing deals. "We need a vehicle to raise money, so we needed to pursue Labat".