New deal to bail out gold miner, Redwing
Redwing Mining Company (RMC), has entered into a joint venture agreement with Duatlet Investments in a development that will see injection of fresh capital into the gold miner, official documents seen by this publication show.
Betterbrands Mining Company (BMC), which had been running operations at Redwing, has now been ordered to suspend all mining activities with immediate effect to pave the way for the operationalisation of the agreement.
BMC, owned by prominent gold dealer Scott Sakupwanya, is part of Duatlet Investments, which also includes Prime Royal Africa and Probadek Investments Limited. The agreement will be valid for four years, subject to renewal for another year.
Gold is one of the key minerals Zimbabwe hopes will help it achieve a US$12 billion mining economy by 2023. Substantial investments have been poured into a number of projects including Eureka Gold Mine in Guruve and Shamva Gold Mine.
In terms of the agreement, the consortium will provide initial working capital of at least US$3 million for procurement of critical spares, payment of corporate rescue costs and settlement of proven claims by creditors and payment of wages.
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 in corporate rescue notwithstanding opposition by Metallon Corporation, its parent company.
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 many litigations, which are still pending. Knowledge Hofisi of Aurifin Capital, was appointed the corporate rescue practitioner for RMC on 21 April 2021 following the suspension of Dr Madondo by the Master of the High Court.
In terms of the deal, RMC will receive 28 percent of net earnings while Duatlet will get the remainder at intervals determined by a steering committee, using transactional platforms approved by the Fidelity Printers and Refiners.
The steering committee will comprise eight members including Mr Hofisi, a chief mining officer,a chief finance officer, three non-executive members nominated by Duatlet and two non-executive members representing employees and creditors.
“On 29 November 2021, Redwing Mining Company signed a joint venture agreement with Duatlet Investment,” said Mr Hofisi. “The suspension of mining activities will enable operationalization of the joint venture agreement.”
Mr Hofisi said while the decision to suspend mining operations was “deeply regretted,” it had been occasioned by the need to address “strategic imperatives.”
In his rescue plan, Mr Hofisi said Redwing will need about US$6 million to restart production by bringing in new investors into the business valued at 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.
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.-The Herald
