Bleak Christmas for miners as Mowana suspends operations
Lebogang Mosikare | Friday December 14, 2018 13:19
For the workers facing a bleak Christmas, they have had to endure hardship for the past months. For the past three months, MCM has not been able to pay its workers and service providers well on time.
According to an employee of MCM, the workers have not been paid their November salaries.
“The mine is still owing us November salaries. We don’t know when we will be paid. The situation looks very gloom.
We are not even sure how we are going to spend the festive season. We have been put on an indefinite paid leave. The mine has promised to pay us sometimes this week but we are not sure about that,” said a mine worker.
A few weeks back, MCM’s general manager Dominic Doherty allayed fears that MCM would not be able to pay the workers their November salaries.
Doherty told Mmegi that there was nothing to suggest that the mine would not pay the employees their November dues. By end of business yesterday, the employees were still not paid.
A unionist privy to the issue speaking on condition of anonymity confirmed the latest developments. The Botswana Mine Workers Union member also confirmed that the workers have not been paid their November salaries.
“The mine has been closed since Thursday last week. The workers and other service providers have not been paid.
The mine’s management has promised to pay the workers this week, but we are not sure that they would have secured funds to pay the workers because they failed to pay them on time on several occasions in the past,” said the concerned unionist.
The indefinite suspension of operations at MCM has also been confirmed by the company in a statement it released three days back. According to the statement, the suspension came after Cradle Arc could not complete a conditional US$4 million (about P40m) extension to its working capital facility with Fujax Minerals and Energy.
Cradle Arc said the working capital facility extension for its 60%-owned subsidiary Leboam, which operates MCM, had been conditional on the completion of certain documentation and final approval from Fujax’s credit committee.
All had seemed fine, with Fujax advancing $1 million (about P10m) to Leboam before the facility completion, but it then did a U-turn, saying it would not allow any further drawdowns unless it was granted security over Leboam’s interest in MCM in respect of the working capital facility and all other indebtedness due to it.
This was easier said than done, with Cradle Arc requiring consent from the holders of the $10 million secured loan notes, which mature in April 2019, and ZCI Limited, to share their security over MCM with Fujax.
The company had started negotiations to this end but did not seem optimistic there would be a favourable outcome, saying “to date, such negotiations have not been progressing in a positive direction”. Overall, the situation puts significant pressure on its working capital position, which led to the suspension of the operations and a trading halt on AIM, pending clarification of its financial position, according to the statement.
Cradle Arc said its board was also seeking insolvency advice.SP Angel, Cradle Arc’s joint broker, said the working capital facility had been intended to help local management address and spares shortages at MCM and bring it up to its nameplate capacity of 155 tonnes per hour of ore treatment.In October it got a $2 million loan from its largest shareholder, PenMin Botswana, to combat breakdowns and interruption at Mowana.
“Progress towards this objective is setback by the failure to complete the working capital facility,” the broker said.
Numerous efforts to contact Doherty were futile as he was not answering calls.