Nasty fight over gold mine

Fawcett accused of fronting scheme for hostile takeover
Shareholder claims threats from Kavango executives

Business Reporter

A POTENTIALLY bruising fight for Gwanda-based gold producer Vubachikwe is brewing after mine owners Forbes & Thompson accused one of the creditors, Fawcett Security Operations, of trying to place the mine under corporate rescue as part of a plot to engineer a hostile takeover by London Stock Exchange-listed Kavango Resources.

Fawcett made an application on April 25 to put Vubachikwe under corporate rescue in terms of Section 124 (1) of the Insolvency Act, arguing that it was “heading towards insolvency” and “owes various creditors, including workers, the Zimbabwe Revenue Authority and ZESA Holdings, more than US$10 million”.

However, the mine’s managing director, Mr Allan Dolan, who is also a majority shareholder in Forbes & Thompson through Duration Gold, claims Fawcett’s application was “mali fide” as it had refused payment of the US$181 067,50 it was owed, which betrays its complicity in the plot.

In revelations made in an opposing affidavit filed on May 10, Forbes & Thompson says there was an ongoing conspiracy by some United Kingdom- and Bulawayo-based parties to orchestrate a hostile takeover of the mine through the corporate rescue route.

It alleges the brains behind the plot was Mr Benjamin “Ben” Turney, a United Kingdom businessman and chief executive officer of Kavango Resources Plc, a London-listed junior mining company that is controlled by the Kansagras, a wealthy family of Indian descent with roots in Kenya.

Mr Turney is reportedly working in concert with Marida van der Spuy and Rob Forfar — two former senior managers of Duration Gold — to pressure Mr Dolan to sell the mine to Kavango for a song.

It is further alleged that during the course of 2023, the two attempted to turn Vubachikwe staff against Mr Dolan, undermine the mine’s financial position, steal and provide confidential information to Mr Turney, as well as fabricate amounts said to be owed to several creditors, such as Motor Maintenance Systems (run by one Mr Marc Mitchell) and Carbon Processors (run by Mr Julian Nicholas).

In the affidavit, Forbes & Thompson also claims Mr Andy Laing, the managing director of Fawcett, is being used as a front for the application to settle scores with current Vubachikwe shareholders following a fallout between Mr Dolan and the Thompson family, who are former owners of the asset and are reported to be associated with Mr Laing.

“This application, though filed in terms of provisions of Section 124 (1) of the (Insolvency Act) as an application for corporate rescue is in fact not an application for corporate rescue in terms of its substance,” said Mr Dolan in the opposing affidavit.

“The background to the application is that the applicant and a few creditors, some of whose claims are denied and have been challenged in court, have teamed up with a United Kingdom-based entity with local representation that is attempting to take over the business from the first respondent (Forbes & Thompson) by way of a hostile takeover. The applicant has filed this application in an attempt to achieve this end, an issue which will become clear once the court considers the full extent of this affidavit and the relevant annexures . . .

“It is Ben Turney and Kavango that has since conspired with certain of first respondent’s creditors and two former senior managers to come up with this application . . .”

Ulterior motive

The reported refusal by Fawcett to accept the money it is owed and its insistence on pushing for the corporate rescue route has made Forbes & Thompson believe it is doing Kavango Resources’ bidding to wrest the business out of its current shareholders.

“If indeed the applicant was only interested in recovery of its debt, which should be its only interest anyway, why did it not immediately welcome the offer for payment and provide the requested account details and accept payment?” said Mr Dolan.

Mine owners are also struggling to understand why the security company did not execute on its security if it wanted to recover the debt, as it was securitised over a mortgage.

There is also the issue of why Fawcett is interested in the going concern status (or viability) of the mining company if its security services were terminated.

Added Mr Dolan: “I submit, therefore, that this is a mala fide application that does not have genuine interests of any of the stakeholders of the first respondent.”

Solvency

Vubachikwe, which was put under care and maintenance after an illegal strike in November 2022, also claims “it is not true” that “there is no capacity and or willingness to settle the debts”, as it had since paid several creditors under the Restart Project, which is premised on investing more resources into the mine in order to restart operations.

“The key shareholders, who include creditors who are owed more than 75 percent of the liabilities of the first respondent have either been paid in full or agreed to settlement arrangements which have been put in place,” said the affidavit.

Over US$1,6 million was reportedly paid to creditors over the past 12 months, while it has declared sums not to be due, disputed or under verification of US$1,5 million.

To pay off outstanding salaries owed to workers before the illegal strike, the parties are currently involved in a conciliation or mediation process at the National Employment Council for the Mining Industry, and an agreement is understood to be imminent.

The mine says, as of May 10, 2024, on a book-value basis, its assets exceed liabilities by US$21,6 million, as well as by US$32,1 million when a conservative indicative valuation of the mine’s resources prepared by VBKOM (independent mining consultants) is used.

Its current assets in the same period were US$300 000 (excluding a Zimra refund due of US$1 840 968), while current liabilities stood at US$161 065.

Forbes & Thompson further alleges part of the inaccuracies spread through the recent application was the claim that the mine owed Zimra US$2 671 658 when, in fact, according to the tax management body’s TARMs system, it is Zimra that owes Vubachikwe US$1 840 968.

Through shareholder investment loans, Vubachikwe reportedly also owes its beneficial shareholder, Duration, US$12 925 039, representing over 90 percent the total amount owed by the mine.

Anxieties

There are fears and growing anxieties that putting Vubachikwe under corporate rescue would not only spook shareholders who intend to bankroll the entity to restart operations but would also put a “very complex gold mine” into inexperienced hands that would potentially run it into the ground.

However, most worrying for Forbes & Thompson is that the move would weaken the hold that current shareholders have on the mine and lay the groundwork for Kavango to take over.

So desperate is the UK-based company to lay its hands on Vubachikwe, according to Mr Dolan, that he and his family have been “threatened with harm” over the past few months in order to force him to sell the mine.

“In my personal capacity, I am also a creditor of the first respondent. Over the past few months, I have (been) threatened with harm, and so has my family. I will address the threats to my personal safety by some of the colluding shareholders in my own affidavit in opposing the application . . .” added Mr Dolan.