Hwange Colliery's equipment to be commissioned in July

Published: 01 July 2013

Hwange Colliery Company Limited is going ahead with a strategy to recapitalise the operations as the main thrust that would meaningfully change the fortunes of the firm, acting MD Stanford Ndlovu told the AGM today.

"At the last AGM, it was reported that the company had floated an international tender for the supply of mining equipment on credit and that response was satisfactory especially by Asian companies with the only challenges being the 30% deposits precondition to the lines of credit.

"A deposit of $2.2 million has been paid from internal resources to Sany Heavy Equipment Corporation of the People's Republic of China," he said.

He added that a total of 13 pieces of heavy duty mining equipment is currently being shipped from China and will be commissioned at the mine at the end of July 2013.

The company, Ndlovu said, is also acquiring drilling equipment worth $5 million from another overseas supplier. Procurement of additional mining equipment from China North Industries Corporation and XCMG totaling $22 million is "being executed and delivery expected before end of the year."

Commenting on the forensic audit, he said; "The revelations among others were that the company had unrecorded liabilities totaling $19 million. These were attributed mainly to the Maputo transaction ($5 million), Banc ABC coke facility adjustment ($3 million)… these liabilities were incorporated in the audited financial statements as at 31 December 2012."

Furthermore, he noted that the company's liabilities are in excess of $150 million and the amount was incurred during the period 2009 to 2011 and the legacy debt is constraining the company's cashflows since all the lenders are now demanding repayment of their debts.

"The company is facing liquidity challenges mainly attributed to the legacy debt…This has resulted in the company defaulting on its payment obligations and some creditors have taken the company to court suing for amounts totaling $13 million,' he added.

Ndlovu also stated that the matters are all defended but there is severe pressure to pay and at the same time the requirement to channel resources towards current productivity.

"In the meantime, the company continues with its stringent cost cutting initiatives across the board," he said.

Overall the acting MD told the meeting that performance of the company for the past 5 months was fairly satisfactory and the success going forward would depend on the recapitalisation.

Director's fees of $476 262 was not approved as one shareholders (Nick Van Hoogstraten) contested that the quantum of the fees were inaccurate while audit fees of $189 901 was approved.
- zfn