Lewcor Holdings has accused its Zimbabwean equity investor, RZ Murowa Holdings, of stripping the Elizabeth Bay Mine.
Sperrgebiet Diamond Mining owns the Elizabeth Bay Mine, which started operating in 1911.
Namdeb Holdings, a joint venture between the Government of the Republic of Namibia and De Beers Group, sold the mine to the Lewcor Group in 2019, a year after the mine had gone under care and maintenance.
In 2020, Sperrgebiet Diamond Mining brought in RZ Murowa, a member of the Global Emerging Markets Group, as an equity investor to restart the Elizabeth Bay Mine.
The Global Emerging Markets Group obtained 78% of Sperrgebiet Diamond Mining’s shareholding, while Lewcor Holdings and its minority partners, David Sheehama and MSF Commercial, kept 20% and an employee trust 2%.
The plan was to start operations in the 4th quarter of 2022 and double production by mid-2023.
The deal entailed that RZ Murowa invested N$100m in the first phase and another N$200 to N$250m in the second phase for unscaling production to 40,000 carats per month and carrying out offshore and onshore exploration within mining licence 145 and the offshore licenses 128A and 128B.
The mine started operating in September 2022 and stopped in March 2023. On 14 December 2023, Lewcor filed for liquidation.
According to the Windhoek High Court papers, the Elizabeth Bay Mine produced about 692,000 tonnes when it restarted operations.
Sperrgebiet Diamond Mining incurred a loss of N$205 million during the period because the production was 83% below the target of 96,618 carats.
Additionally, NamPower had disconnected the power supply by May 2023.
Lewcor has approached the Windhoek High Court seeking an urgent order to stop RZ Murowa from stripping the Elizabeth Bay Mine until the liquidation request has been heard.
Lewcor’s chief operating officer Thiaan Lewis charged that RZ Murowa intends to strip the mine of all its movable assets without first paying off the debts, which stood at N$122m as of May 2023.
“The transfer of Sperrgebiet Diamond Mining’s [SDM] movable assets is an attempt to grab an unfair advantage during the period between the submission of the request for liquidation of SDM and the granting of such an order,” Lewis said.
Lewis further said RZ Murowa’s actions of stripping the mine harm Lewcor.
“Sperrgebiet Diamond Mining and RZ Murowa are trying to completely hollow out the mine, devalue it and make it almost impossible to resume mining operations. If all the assets are removed, the mine will offer no value to a potential buyer.”
Sperrgebiet Diamond Mining’s acting CEO, Abraham Grobler, said the assets were sold to RZ Murowa in June 2023 because of an existing contractual obligation.
Grobler added that the assets in question include redundant, obsolete, or used items sold as part of Sperrgebiet Diamond Mining’s revised strategy to operate more profitably.
“Sperrgebiet Diamond Mining has no intentions of resuming operations as they were previously managed, and those assets are not essential to the intended downsizing,” Grobler explained.
Judge David Munsu postponed the case to 9 February for judgment.
