Redwing needs US$6m to restart
METALLON owned gold producer Redwing needs about US$6 million to restart production, the mine’s interim corporate practitioner says, as part of a deal that may rope in new investors in the business, estimated to be worth about US$30 million.
Underground gold production would resume from level one using conventional handheld mining techniques before moving to level three to benefit economies of scale, Mr Knowledge Hofisi said in a proposed rescue plan to be presented to the creditors.
Much of the funding would be raised from new institutional investors, said Hofisi.
“The transaction contemplated will result in the acquisition of new and existing securities by potential investors from Redwing and its existing shareholders,” said Mr Hofisi.
“However, it may be necessary to strike a balance between the competing needs of the existing shareholders and the company as it seeks to trade out of its financial distress.”
Mr Hofisi said the company intended to bring on board new institutional investors who buy shares from existing shareholders and also inject funds into the business.
Part of the funds to be injected will be used to settle creditors or the potential investors would buy shares from the existing shareholder and also have new shares issued to them.
The provisional claims currently stand at $11,5 million and US$3 million “The issue of new shares will result in funds flowing to the company or new shares will be issued to new shareholders, and this will have the net effect of diluting existing shareholders.
After resuming operations, Redwing would employ modern mining techniques with diesel mechanised access and mining methods, which may be attainable through the implementation of a five-year strategy as set out in the company’s restart programme.
About US$900 000 is needed for dewatering, US$1,7 million for equipment, US$1,1 millionfor plant refurbishment, US$1,9 million for retooling and US$1 million for working capital.
Redwing was placed under corporate rescue in July 2020 after the Associated Mine Workers Union of Zimbabwe filed an application on the grounds that the company was financially distressed, among other reasons.
Redwing was placed under corporate rescue notwithstanding opposition by Metallon. Dr Cecil Madondo of Stone House Consultants was appointed as the corporate rescue practitioner in July 2020.
However, since the commencement of corporate rescue proceedings, there have been litigation cases, which are still pending. Mr Hofisi was appointed on 21 April 2021 following the suspension of Dr Madondo by the Master of the High Court.
“A plan to rescue Redwing will hinge on the restructuring of its business, property, debt, affairs, other liabilities, and equity in line with the expectations of affected persons and other stakeholders such as the Government of Zimbabwe which envisages a US$4 billion target by the year 2023 on the back of a 100-tonne gold production,” said Mr Hofisi.-herald.clz.
