Lerala Diamond Mine has failed to source out some funds from some Chinese investors after generating very low revenues from the extraction and sale of Diamonds in the past 12 months forcing the mine to be placed under the care of Provisional Liquidator before its closure.
The Director of the Mine, Spencer Kaisara through his legal advisors from Armstrong Attorneys has approached the High Court on certificate of agency seeking its intervention to appoint Kopanang Thekiso as the mine provisional liquidator on a matter of urgency following the failure of the mine to generate income.
Lerala Diamond mine (PTY) Ltd made an urgent application before the High Court for the provisional winding ÔÇôup because the mine was commercially and factually insolvent and was unable to pay its debts as contemplated in section 368 (C) of the companies Act.
On its legal grounds before Justice Tshweneyagae of Gaborone High Court, Kaisara on his affidavit asked for the winding-up of the mine because he said the Mine only has one primary business namely the ‘’Mine”.
and that they petitioner (Lerala Mine (PTY) Ltd) soley relied on the mine for its income.
‘’The mine as previously indicated has been experiencing significant technical problems and as consequence has performed extremely poorly in the last 12 months. This has resulted in the mine generating very low revenues from the extraction and sale of diamonds,” said Spencer Kaisara.
The Court heard that as on or before February 2014 Kimberly Diamond Limited a company incorporated in Australia under registration number 95150737563 (KDL) acquired Lerala Diamond Mine in Botswana and at that time the mine was in care and maintenance and its infrastructure ,equipment required significant remedial work and was not operating or in production.
In his affidavit Kaisara further reveals that KDL then funded them to the tune of BWP 160,000.000.00 (160 Million Pula) to start up the Mine, but technical problems resulted in a low production of diamonds.
He said during the period that KDL funded the mine, and KDL eventually started to suffer financial difficulties and on or about 1 June 2017 it notified Lerala Mine that it was withdrawing its financial support and that it would no longer be providing financial support.
Although thousands of people had lost their jobs, the mine is still not yet convinced that the Chinese investor who had promised to fund them will come forth resulting in them tputting the mine under provisional Liquidation.
‘’Even if the technical problems at the mine were to be resolved the Mine without further funding would not until 2018 be able to generate sufficient revenue to cover its operating costs and to discharge its current and outstanding liabilities. And following KDL’s ceasing to fund its day to day operations, nor commence mining operations as was indicated in the brief dated 30th May 2017 which was sent to employees by the Petitioner that the Petitioner is unable to pay salaries due to cash flow problems,” said Kaisara.
The mine then approached court with an advice from Mark Mc Knee from Armstrong’s Attorneys to place the mine under provisional liquidation.
Mark Mc Knee in his papers before court noted that the Mine has only one real assert namely the mine and its associated infrastructure and equipment.
‘’This is not a liquid assert nor one that is readily realizable by the Petitioner and it is apparent that the petitioner (Lerala Mine )is hopelessly insolvent as it is unable to pay its debts as envisaged in section 368 of the companies Act. And in terms of section 369(f) of companies Act, a company may be wound up where it is just and equitable and I submit before this court Lerala Diamond Mine as the Petitioner has appointed kopanang Thekiso as the Provisional Liquidator”, said Kaisara.
In his ruling Acting Judge, Justice Tshweneyagae ordered that the Mine be placed under a provisional order of winding up in the hands of the Master of the High court. However Justice Tsweneyagae also called on all interested parties to appear and show cause why an order should not be granted.
He then authorized the provisional Liquidator to carry on or discontinue the business of the Mine and that all actions and/or proceedings against the Mine be stayed and that the provisional Liquidator should hold of.