[miningmx.com] — NKWE Platinum looks set for a change-of-control transaction as its cash-strapped majority and BEE shareholder, Genorah Resources, seeks to sell shares to cover debt.
The company announced on Monday Genorah was in discussions with a “major South African based entity’ to acquire a significant stake of the BEE group’s shares in Nkwe. “Moving forward the company will . have new corporate and operational management and seek to commence development of the Garatau PGM project,’ read a company statement.
Genorah owns around 60% of Nkwe, which in June unveiled an optimised bank feasibility study on its 10.8 million ounce Garatau project on the Bushveld’s Eastern Limb, carrying a R5.3bn capital requirement tag.
Monday’s announcement came after Genorah’s financiers, Gleneagles, last week started selling Nkwe shares on the open market as pay-back for an outstanding loan of $2.8m. Genorah borrowed the cash from Gleneagles in September last year against shares in Nkwe. Some of the funds sourced were put back into Nkwe.
However, Gleneagles last week sold some 12 million of Genorah’s shares in return for $739,000 following several payment defaults, causing Nkwe’s ASX-listed shares to plummet from 7.3 Australian cents to 4.5 cents.
Nkwe said Gleneagles has in the mean time agreed to halt the selling of its shares for at least 45 days. “Further, Genorah have advised Gleneagles they have secured financing in South Africa to pay back the outstanding loan in the next 10 to 20 days irrespective of the stand still in place,’ Nkwe said, adding that it has set in motion the discussions around the change of control transaction at $0.20 per share.
A Nkwe spokesperson said Genorah wasn’t looking to sell its entire shareholding in Nkwe. “Genorah will retain some stake [at this point in time] with a new BEE investor as well, however this may change in time,” he said.
Nkwe had just over $537,000 in cash resources at end-June and said it expected to make a further announcement within the next four to six weeks.
MODIKWA DISPUTE
African Rainbow Minerals CEO Mike Schmidt has said the company was still locked in a dispute with Nkwe over the rights that were awarded to Genorah over five farms down-dip from ARM’s Modikwa JV with Anglo American Platinum [Amplats]. The farms include the property related to the Garatau project.
Amplats held the old order rights over all the properties. However, these rights were awarded to Genorah upon conversation. ARM previously indicated it has commenced with legal proceedings against the DMR and Nkwe, a process which Schmidt on Monday said was still ongoing.
