South Africa-focused Mineral Sands Resources (MSR) will, in a month’s time, publish a business rescue plan for the Tormin mine, in the Western Cape.

Shareholders and creditors will then, on December 13, vote to approve the plan. The plan addresses the business rescue practitioners’ (BRPs’) approach to realising the value of the asset.

The BRPs have started engaging with prospective investors in this regard and will engage with all creditors, employees, stakeholders and interested parties to better understand their requirements, provide clarity on the impact of the plan and outline how affected parties will be settled as the business rescue process unfolds.

Operations at the Tormin mine initially started in 2013, with the project containing several high-grade mineral sands deposits. It started facing production delays and financial trouble in February this year.

In another key step to restoring Tormin’s long-term sustainability for all stakeholders, the company has appointed a specialist maritime legal team to resolve a claim against the company related to a shipwreck incident in July this year.

Work has started to establish the extent of the interruption to mining that the recovery process will entail, with local weather conditions expected to play a key role in the tenure of the recovery operation.

The Department of Mineral Resources as well as Transnet National Ports Authority have reportedly pledged their support to MSR in meeting the business rescue commitments.

Meanwhile, MSR has resumed production at the Tormin mine in line with a revised mining and processing schedule, but a lack of long-term plant maintenance is impacting on volumes. In this regard, optimisation work is under way to extract greater efficiencies.

The mine has about two weeks of supply stockpiled, with five shipments of zircon having been made to local customers in the last month.

MSR is working to secure medium to long-term supply contracts for all products produced by the mine, either to local or international clients, on accelerated payment terms to support the mine’s cash flow.

The company has already secured a new export agreement for the sale of 80 000 t of ilmenite, with shipments due to start in November.

BRP Warren Castle says the publication of the business rescue plan will be a key milestone as MSR works to restore Tormin’s status as a driver of the West Coast’s regional economy and in doing so attract the support of a new equity partner.

“Operational and financial challenges remain, including high input costs, but we are encouraged by our recent production performance and the sales achieved. We believe that many South African exporters will remain under pressure owing to the rand’s persistent strength and the resultant effects on their margins.

“However, I am pleased to report that we are benefitting from massive buy-in from our teams on the ground, and their commitment to making the turnaround process work,” he adds.  

As one of the largest mining operations in the Western Cape and a large employer in the Lutzville area, MSR affirms that it will continue contributing to the regional economy for many years to come.

This supports our belief that one of the largest mining operations in the province, and the second-largest employer in the Lutzville area, can continue to contribute to the regional economy for many years to come.