There is no end in sight to the woes bedeviling the ill-fated Bamangwato Concessions Limited (BCL) Group.
As he questions Polaris II strategy price tag, BCL liquidator Nigel Dixon-Warren says the mine disregarded proper accounting procedures.
To this end, Dixon-Warren painstakingly continues to investigate the financial expenditure by the collapsed mine on both joint ventures and joint venture agreements.
The 2018 Tenth Status report to creditors of both BCL and Tati Nickel Mining Company says it has become clear that “proper accounting procedures were not followed” when the mine entered into those agreements.
Added to this, the report says “it is still not known” what the total financial expenditure of the Polaris II strategy was. The botched BCL Polaris II initiative was meant to diversify and extend the life of the mine beyond 2020.
This would have seen the smelter at BCL continuing to smelt mineral ore from Selebi-Phikwe and other mines such as Tati Nickel as well as smelting ore from other mines in Africa and Europe.
According to the report, work is reportedly on-going in order to dispose of the interests BCL held in the joint venture companies and joint venture agreements.
This includes two joint venture agreements and all companies listed as being subsidiaries in the corporate structure aside from Pula Steel Casting and Manufacturing and Bamangwato Concessions Proprietary Limited (BCLI).
“Tati has considerably assessed tax losses of P1,6 billion as at 31st December 2018 which would be available to be offset against future taxable income in the event that the entire issued share capital of Tati is acquired by a third party,” reads the report in part.
Furthermore, it is stated that the detailed analysis and reconstruction of records will only be concluded in 2019. Added to this, the expenditure is expected to range between P150 and P200 million – it could significantly be more the report says.
“There are a number of transactions which need to be investigated in much greater detail. In the meantime, the technical analysis of the data is also on-going,” the report signed by Liquidator Nigel Dixon-Warren further reads.
It is stated in the report that it is clear from the analysis being done that “BCL was not focused on its core business in entering into many of the joint ventures.”
Also it is unclear what investment strategy, if any, was followed by BCL in undertaking these joint ventures (and this includes the investment into Pula Steel) or the selection of joint venture partners.
Dixon-Warren stated in the report that this is a matter to be further investigated as to whether there was any misfeasance. He however stated that the intention is to prepare technical information memoranda for each of the joint ventures, as applicable which will be made available to third parties to solicit offers for the shareholding or interest subject to any pre-emptive rights of the other shareholders.
“The process of developing the technical information memoranda is well underway. This will be reported on in more detail in the report to the creditors to be issued in advance of the reconvened second meeting,” reads the report.
Stated in the report is that the liquidator of Pula Steel has commenced a process to dispose of the assets of Pula Steel as a going concern to a party interested in restarting the plant. Added to this is that the outcome of this process is not yet known. As such the potential return on the claim BCL has against the estate of P65 million is not yet known.