SECTION 172 STATEMENT
a. the likely consequences of any decision in the long term;
b. the interests of the Company’s employees;
c. the need to foster the Company’s business relationships with suppliers, customers, and others;
d. the impact of the Company’s operations on the community and the environment;
e. the desirability of the Company maintaining a reputation for high standards of business conduct; and
f. the need to act fairly between members of the Company.
The following disclosure describes how the Directors have considered the matters set out in Section 172(1)(a) to (f) and forms the Directors’ statement under section 414CZA of The Companies Act 2006.
Our key stakeholders and how we engage with them
The Board considers its key stakeholders to be the Group’s employees, suppliers, contractors, the communities situated close to the Liqhobong Mine, the Government of Lesotho (its partner and 25% shareholder in Liqhobong), its Bondholders, the senior debt provider Absa (including its insurer ECIC), and its shareholders.
|
Stakeholders |
Stakeholder key interests |
How we engage |
|
Our People Having the right people with appropriate qualifications, skills experience, and work ethic is crucial to our longer-term success. |
· Career development · Reward · Engagement · Morale and motivation · Reputation · Training and development · Health and Safety |
· Direct engagement through the Group’s flat organisational structure · Board meetings are held at the Company and Liqhobong Mining Development Co. (Pty) Ltd (“LMDC”) level, during which there is regular, direct engagement with key executive management
|
|
Suppliers and contractors We must maintain trusting relationships with our strategic suppliers and contractors for mutual benefit and to ensure that they are meeting our technical and safety standards.
|
· Mine procurement from local sources where possible · Quality management · Cost-efficiency · Long-term relationships
|
· Meetings with key strategic suppliers and contractors · Ongoing communication and feedback · Contract negotiation and contract renewals · Pro-active management of potential disputes
|
|
Local communities Nurturing a trusting relationship with our local communities will help us to understand and mitigate the impact that our operation has on the immediate surroundings and the benefits that local communities can derive therefrom.
|
· Responsible environmental stewardship · Long-term relationships · Community support · Developing sustainable community enhancement projects
|
· Regular meetings with the Community Forum · Open lines of communication, with an active response where appropriate · Compensation agreement in place · Developing relationships with reputable NGOs that support local communities
|
|
Government of Lesotho (“GoL”) We need to maintain a trusting relationship with our partner and 25% shareholder in the Liqhobong Mine to ensure that the Mine operates for the benefit of all stakeholders for the extent of the life of mine. |
· Long-term relationship · Sustainable benefits for the Kingdom of Lesotho – royalties and indirect taxes · Commercially viable operation · Source of local employment · Source of support for the local community |
· One-on-one, ad hoc meetings between the Minister of Natural Resources and the Company’s Executive Chairman, as the respective shareholder representatives · Through Government appointed directors on the board of LMDC · Regular interaction with various government departments, particularly the Ministry of Natural Resources through the office of the Commissioner of Mines · Letters, presentations, and electronic communication · Open lines of communication
|
|
Stakeholders |
Stakeholder key interests |
How we engage |
|
Debt Providers We need to maintain a trusting relationship with our Bondholders, Absa, and the ECIC who have supported the Project since it commenced in 2014. |
· Success of the Project · Repayment of senior and subordinated debt
|
· Monthly operational reports including financial forecasts · Quarterly meetings with Absa and ECIC representatives, with open lines of communication · Regular interaction between the Company’s Executive Chairman and the Bondholder representatives |
|
Shareholders We ensure that we provide fair, balanced, and comprehensive information to shareholders on as regular basis as possible, to ensure that they have a strong understanding of our strategy and performance. |
· Financial performance · Appropriate corporate governance and transparency · Operating and financial information · Confidence and trust in the Group’s leadership team |
· Individual meetings · Quarterly updates · Annual report and accounts
|
The Board considers the following to be the key decisions and considerations it has made during the year to 30 June 2023. In addition to these decisions, the Board assessed and reviewed the liquidity position of the Group every month.
|
Board Decision |
Considerations |
|
Residue storage dam stability The Board considered whether appropriate steps had been taken and procedures adopted to ensure the stability of the residue storage facility situated at the Liqhobong Mine. |
Notwithstanding, an appropriate construction methodology was adopted ensuring that maintenance, control measures, and risk monitoring were adequate and applied, and all identified risks sufficiently mitigated, the Company adopted and implemented the Global Industry Standard on Tailing Management to adhere to best practice tailings management at Liqhobong Mine. |
|
Senior Debt restructuring and refinancing The senior debt restructuring and refinancing process that had been initiated with Absa and the ECIC, supported by the Company’s Bondholders, resulting as a preliminary step, in the conclusion of a Bridge Facility Agreement: ZAR31 560 000 Term Facility and an extension of the Facility to a Bridge Facility Agreement: ZAR182 184 000 Term Facility, to provide, inter alia, the capital required to restart Liqhobong Mine, was finalised with the execution of the Second Amended and Restated Senior Secured Facilities Agreement which: (i) restructured the senior secured debt into Facility A – US$20.5 million (interest bearing) and Facility B – US$49.0 million (non-interest bearing); (ii) refinanced the total Bridge Facility outstandings by way of a ZAR205.2 million Facility C commitment; and (iii) provides for a Working Capital Facility of ZAR201.7 million. |
To refinance the Group and restructure the senior Absa project debt to levels in line with an independent assessment of the debt-carrying capacity of the business, to ensure a sustainable level of senior debt, flexible debt repayments out of available cash flow, and sufficient capital to restart and operate the Liqhobong Mine.
|
|
Restart of Liqhobong Mine The Board considered the financial position of the Group, the resurgent diamond market post the COVID-19 pandemic, and the imminent completion of the Absa debt restructuring and refinancing, and decided to restart Liqhobong Mine by reappointing the required staff and appointing a mining contractor to re-commence mining operations. |
The efficient restart of the Liqhobong Mine as quickly as possible for the benefit of all the Company’s stakeholders (referred to above). Additionally, to be able to repay the restructured senior debt facilities, repay the Bondholders, and retain future optionality to provide a potential return to shareholders. |
|
Company Policies The Board approved a revised Anti-corruption and Bribery Policy, a Whistleblower Policy, and a Human Rights Policy. |
To enhance the Company’s zero-tolerance approach to corruption and human rights abuses, the Anti-corruption and Human Rights Policies were introduced, as well as the Whistleblower Policy, to encourage reporting of, inter alia, any instances of corruption or human rights abuses at or affecting its operations. These steps were also taken as part of a broader initiative to enhance the Company’s Environment, Social, and Governance (“ESG”) credentials, an ongoing exercise.
|