‘Mbada incurred over US$115 million debt’

MBADA DIAMONDS (Private) Limited incurred huge losses before tax of US$59 121 845 for the year ended December 31 2014, while in 2013 the company made a loss of US$44 686 145, with its liabilities exceeding its current assets by US$115 969 783, the Zimbabwe Independent has established.

By Elias Mambo/Obey Manayiti

This story is part of our ongoing ground-breaking investigation into the Marange alluvial diamonds discovery and subsequent plunder at various stages by state and non-state actors. The special series is supported by the Investigative Journalism Fund.

According to the audit report done by Grant Thornton: “The situation indicates the existence of a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern and therefore, it may be unable to realise its assets and discharge its liabilities in the ordinary course of business.”

The audit report says that Mbada was the subject of various lawsuits by suppliers and former employees in 2014 after failing to meet its obligations.

“The outcome of these pending lawsuits, in which the company is a defendant, cannot be presently determined.
“The company has also not been able to settle all the obligations in respect of those cases for which judgements were passed against it by the courts.

“The ultimate outcome and effect of the legal matters cannot be presently determined, and no provision for any additional liability that may result has been made in the financial statements,” reads the audit report.

The report say that the company directors put in place mechanisms to improve the company’s operations.

“Diamond recovery will now be premised on the latest fourth generation X-Ray transmission technology which is significantly more efficient in recovering the oxide-coated diamonds, now prevalent in Marange.

“With this technology, recovery efficiencies are above 80% compared to Flow sort technology which recovers only 20% of the diamonds.”

The audit indicates that: “The introduction of the upgraded XRT technology has also incalculably reduced diamond security risk. This is due to the fact that XRT machines are less bulky than flow sort machines, thus allowing all processing and recovery to be done in a more integrated and confined area.”

The audit also says a short-term recovery project was initiated in November 2015 and financed through a short-term loan of US$1,5 million (R22 million).

“The recovery project is aimed at improving the production output and quality by processing conglomerates and increased volumes of the tailings and alluvials.”

As reported by this newspaper, Mbada Diamonds, previously the largest producer of gems in the troubled Chiadzwa diamond fields, is drowning in massive debts accrued during its ill-fated mining stint.

The company’s mining licence was withdrawn alongside those of other firms when government forcibly sought to merge the companies into the Zimbabwe Consolidated Diamond Company in February last year.

Although Mbada is contesting government’s decision in court, it has been financially paralysed, failing to pay millions to service providers.

As a result, Mbada Diamonds’ assets have been attached and auctioned over the debts.

In a bid to have a united voice, more than 200 creditors came together to push for the recovery of their money from the mining firm. Although their spirited bid reveals a combined US$35 million debt, the cumulative debt is said to be over US$200 million, a figure Mbada denies.

The biggest creditor is Pungwe Mining Company, owed US$18 612 510. The company specialises in mining equipment and has been fighting vigorously to recover its money.

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