Shamva and Mazowe Mines have been put into corporate rescue after an application by unions for a reconstruction order on the two mines, owned by Metallon, once the country’s biggest gold producer.
The Associated Mine Workers Union of Zimbabwe (AMWUZ) applied for a reconstruction order on the idled Mazowe and Shamva in 2019, in a bid to secure unpaid wages as creditors besieged the mines.
In a ruling on Tuesday, High Court Judge Tawanda Chitapi appointed Reggie Saruchera of Grant Thornton as administrator and Cecil Madondo of Tudor to lead the corporate rescue.
“The corporate rescue practitioners shall carry out their duties in accordance with the relevant provisions of the Insolvency Act and shall be entitled to be remunerated in terms of section 136 of the Act,” Chitapi ordered.
Distressed companies can be placed in corporate rescue in order to avoid liquidation and stave off creditors.
At its peak, Metallon, controlled by Mzi Khumalo, produced just short of 100 000 ounces from its four mines, Shamva, Mazowe, Redwing and How. The company however halted operations at Redwing, Mazowe and Shamva in 2019, weighed down by debts of US$200million.
The company has a significant mineral resource of 8.3 million ounces of gold, at the last available estimate in 2016. This resource drew the interest of some potential buyers, including Canada’s B2Gold Corp, which last May said it was in talks to buy Shamva.
B2Gold’s interest cooled after Government officials rejected its demands to be exempted from selling gold to central bank.
Other bidders for Shamva have included Havilah Gold, a local company owned by preacher Emmanuel Makandiwa.
However, the most likely suitor for Shamva and Mazowe is Kuda Tagwirei’s Landela Mining, which is on an acquisition spree of mining assets. It’s unclear how the latest court may impact on the sale.
Khumalo’s relations with Government collapsed over allegations that he externalised US$31 million from the company, crippling its operations.
Khumalo, in turn, last year sued the Reserve Bank of Zimbabwe for what it says is US$132 million worth of lost profits due to central bank’s alleged failure to pay for gold.
