Meikles agrees interest rate for funds deposited with RBZ

Published: 20 August 2013

Meikles Limited has agreed the rate of interest to be accrued on the funds held on deposit with the RBZ, Executive Chairman John Moxon told the AGM this morning.

"The rate of interest to be accrued on these funds has now been agreed with the RBZ and the date from which interest will accrue to the Company at the agreed rate has also been determined," said Moxon.

He said the impact of that agreement is to reverse the $26 million loss recorded from the time of dollarisation to 31 March 2013 which resulted from the additional finance charges caused by the inability to access the funds.

However the recent development is not going to improve the cash flows immediately.

"RBZ is not going to write out a cheque for that amount (which is now approximately $66 million by Zfn estimations) but the governor is working on modalities on how we can access it in few months," he added.

He also said he believed the funds will be paid out because the RBZ is not broke as it has audited accounts showing that it is a going concern.

"What also gives us some comfort is the government guarantee in place, such that if we fail to get the funds from the RBZ, it becomes the responsibility of the government to pay us," Moxon said.

The funds are expected to easy the group's debt and interest burden as well as assist in funding operations.

Moxon also said Cape Grace continues to win awards for excellence, as well as growing profits and cash.

Executive director Mark Wood told the meeting that the idea to venture into mining was suggested to them by government authorities after Meikles successfully completed its indigenisation application.

"We then identified a technical partner with mining skills and access to large amount of capital while we act as the indigenous partner," said Wood.

He added that they are looking at 7 minerals and currently talking to 3-4 gold miners to either acquire or partner them.

Wood said the mining joint venture considered buying Rio Tinto UK's 78% in Murowa Diamonds but this couldn't materialize as the shares were subsequently taken off the market.

He said Meikles will own 51% of the JV but will not use its own capital in the operation because they will be largely funded by loan capital.

Fees $35 125 and $109 882 were approved for directors and auditors respectively while Deloitte & Touch were reappointed as external auditors.

- zfn