DEFUNCT diamond mine River Ranch Ltd, placed under liquidation by the High Court in 2012, is failing to attract investors almost five years after its operations ceased.
By Hazel Ndebele
Sheikh Adel Aujan, the Saudi owner of Rani Investments, who has a controlling stake in the mine, died aged 70 on January 22 in his country.
The company, whose assets at the time of liquidation were worth US$5,6 million, owed Aujan US$21 million. He was the biggest creditor of the mine.
River Ranch, located in Beitbridge, was placed under liquidation on July 18 2012 at the instigation of Aujan’s Rani Investments LLC which has a controlling stake in Limpopo Mining Resources (LMR).
According to the mine liquidator, Winsley Militala’s report presented at River Ranch’s second creditors’ meeting held before the Master of the High Court on November 28 2012, LMR owns 80% of River Ranch through its subsidiaries Cornerstone Investments Ltd and Sedna (Proprietary) Ltd, with 40% shareholding each, while Khupukile Resources owns the remaining 20%.
Former vice-president Joice Mujuru’s family holds a 20% stake through Khupukile Resources, whose directors are former Zanu PF legislator Tirivanhu Mudariki and Mujuru’s daughter Nyasha Mujuru del Campo.
According to the report, the mine still has ore reserves which are believed to be the main asset of the mine. The ore reserves, according to the report, are 9,8 million tonnes and estimated to be worth US$162 million.
The report shows that River Ranch, for the years 2009, 2010 and 2011, registered an accumulated loss of US$6,5 million, attributed to undercapitalisation.
“The main reason for the company’s failure can be attributed to undercapitalisation; it relied solely on shareholder support for its operations. Just to illustrate the company’s dire financial needs, the shareholder support over the years rose to a staggering US$21 million,” reads the report.
“The auditors, Ernst & Young, in their draft audited financial statement for the year ended 2011, showed that the company was no longer a going concern due to its inability to service creditors and its reliance on shareholder support.”
According to the document, River Ranch’s inability to service creditors and the subsequent resolution to liquidate made the company a suitable candidate for liquidation. However, almost five years on, the liquidation process is yet to be concluded. Sources who spoke to the Zimbabwe Independent said some of the investors interested in buying the mine have been frustrated by the liquidator’s office, which is accused of stalling the process.
“The mine has had offers from interested investors, but there have been problems at the liquidator’s office, where the processes have been stalled and in some cases, investors have even been denied the chance to view the mine because they were not deemed a credible company,” the source said.
However, Militala denied the allegations, saying he is not aware of such developments. He provided this newspaper with a list of companies that have expressed interest in buying the mine. Nothing, however, has materialised to date.
“I am unaware of such people or allegations, but nonetheless, if those people who have approached you with such allegations are seriously interested in buying the mine, they are free to approach me without delays,” Militala said in a written response to this paper.
According to Militala, companies which have shown interest in acquiring the mine include Zimbabwean Creation Minerals and Consultancy and a Zambian company, Dawn Diamonds Trading. Discussions with the two companies are said to be underway.
Zimbabwean companies which showed interest before negotiations stalled, according to Militala, are Africa Corporate Advisors, Skycall Investments, Elkhart Mining and Boka Crescit Eundo.
Other investors who have expressed interests are from the United States, England, China, Canada and South Africa.
Sources told the Independent that offers between US$10 million and US$14 million have been offered. Documents on companies interested in buying the mine, provided by Militala, show that some investors are constantly in touch with the liquidator and are promising to mobilise funds.
On the other hand, the liquidator’s report also confirms that efforts to get a buyer have been unsuccessful.
“A number of firms have made some expressions of interest, but nothing concrete has come out of that. One firm has toured the mine, and it’s Mwenezi Exploration, with a view to purchase,” the report states.
“All these firms have been requested to put their offers in writing and at the time of concluding this report, nothing had been received. Your liquidator will continue dialogue with those that have shown interest and should there be need for directions from the stakeholders, a meeting will be called for that purpose.”