Ongopolo cash crunch not caused by negligence: Govt

Ongopolo cash crunch not caused by negligence: Govt

LOW production almost led to the bankruptcy of Ongopolo Mining and Processing, according to a financial and technical audit carried out on the instructions of Cabinet.

The cost of the audit was around N$773 000 and the Ministry of Mines paid for it, Cabinet announced last week. It did not say who conducted the study.Ongopolo Mining and Processing took control of the financially stricken Tsumeb Corporation Limited in March 2000 but six years later the company again ended up at the receiving end of the same procedure.This time the beleagured mine has been bailed out by Weatherly International, a British company with little experience in the copper mining industry.Weatherly has promised to provide N$120 million to settle Ongopolo’s debts.The company promised to pump a further N$150 million into Ongopolo to keep the company up and running.As a result, Weatherly acquired a 97 per cent interest in Ongopolo Mining and Processing – a buyout that saw control of one of the main pillars of the Namibian mining industry pass from Namibian hands to a new, London-based owner.Cabinet said the report found that the mineral resources and reserves reported by Ongopolo were a reasonable presentation of the available information.”The report also found that there was no malicious and gross negligence to the estimation or reporting of the mineral resources and mineral reserves by Ongopolo,” Cabinet said.Earlier, the company said exploration and mine development were some of the main reasons for the financial distress that brought Ongopolo to the brink of bankruptcy in late April, when Weatherly took over the management of the severely cash-strapped company as an interim measure to keep it operating.Extensive exploration and mine development, which saw the reopening of the Matchless Mine west of Windhoek and the development of a new mine at Asis Far West close to Kombat, cost more than was anticipated and left Ongopolo in a cash crunch.The company has also been hit by the effects of price hedging, in which it sold future copper production at prices that turned out to be below the copper price that prevailed at the time of the actual delivery of the copper.This resulted in the company losing out on earnings that it could have received at a time when the international copper price was heading for an all-time high.It did not say who conducted the study.Ongopolo Mining and Processing took control of the financially stricken Tsumeb Corporation Limited in March 2000 but six years later the company again ended up at the receiving end of the same procedure.This time the beleagured mine has been bailed out by Weatherly International, a British company with little experience in the copper mining industry.Weatherly has promised to provide N$120 million to settle Ongopolo’s debts.The company promised to pump a further N$150 million into Ongopolo to keep the company up and running.As a result, Weatherly acquired a 97 per cent interest in Ongopolo Mining and Processing – a buyout that saw control of one of the main pillars of the Namibian mining industry pass from Namibian hands to a new, London-based owner.Cabinet said the report found that the mineral resources and reserves reported by Ongopolo were a reasonable presentation of the available information.”The report also found that there was no malicious and gross negligence to the estimation or reporting of the mineral resources and mineral reserves by Ongopolo,” Cabinet said.Earlier, the company said exploration and mine development were some of the main reasons for the financial distress that brought Ongopolo to the brink of bankruptcy in late April, when Weatherly took over the management of the severely cash-strapped company as an interim measure to keep it operating.Extensive exploration and mine development, which saw the reopening of the Matchless Mine west of Windhoek and the development of a new mine at Asis Far West close to Kombat, cost more than was anticipated and left Ongopolo in a cash crunch.The company has also been hit by the effects of price hedging, in which it sold future copper production at prices that turned out to be below the copper price that prevailed at the time of the actual delivery of the copper.This resulted in the company losing out on earnings that it could have received at a time when the international copper price was heading for an all-time high.

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