- Galane didnโt pay much to the Botswana Government in terms of royalties
- Cash was kept offshore and not used to settle outstanding royalties in Botswana
- Galane funded acquisitions outside Botswana using Mupane-generated cash
Fresh questions are being raised about how Galane Gold was allowed to transfer millions of Pula to offshore accounts while its subsidiary, Mupane Gold Mine, struggled to meet local financial obligations.
This emerged recently when Mupane Gold Mine liquidator Kopanang Thekiso called for an inquiry into the approvals granted to Galaneโparticularly a controversial arrangement during the COVID-19 pandemic that allowed the company to repatriate 100 percent of its gold sales proceeds to a Canadian bank account.ย
Tshekiso was making a presentation before the Masters of the High Court Silibaliso Daramola and creditors. He noted that the haemorrhaging of Mupane occurred despite no changes to Botswanaโs exchange control regulations at the time.
โFrom the discussion with Zinyemba, who was the Commercial Manager, Galane didnโt pay much to the Botswana Government in terms of royalties,โ Thekiso said.
He added: โIn the financial statements, a total of US Dollar Five point Three Million was paid in the years 2018 to 2021. The company approached the Department of Mines from onset and requested that royalty payments be deferred to assist the company with cash flows while they were getting established.โ
According to Thekiso, additional deferral requests were made and granted over the years. One of the justifications offered by Galane was an intention to further develop the Mupane resource through exploration in the Tati greenstone belt.
โHowever, no exploration activities were conducted during Galaneโs tenure at the mine. Consequently, the confirmed mineral resource at Mupane remains limited compared to previously inferred amounts,โ said Thekiso.
He attributed this to Galaneโs publicly stated strategy of focusing on low-cost mining operations, which typically excludes significant investment in exploration.
Thekiso further revealed that during the COVID-19 period, the mine requested permission to receive all its gold sales proceeds in a Canadian accountโdespite the lack of any official changes to exchange control policy. The request, he said, was granted.
โThis practice continued, Iโm told, until the company was sold to Hawks (the current owner of Mupane Gold Mine). During these times, surplus cash was kept offshore and not used to settle outstanding royalties in Botswana,โ he said.
He called for an inquiry into how Galane obtained these permissions and how the transaction with Hawks was approved despite the companyโs significant outstanding liabilities.
โThis may also explain how Galane funded acquisitions outside Botswana using Mupane-generated cash, while accumulating substantial liabilities in Botswana,โ Thekiso said.
He added: โIt is also worth investigating the solvency status of Mupane at the time of the inter-company data balances, which were written off, and the conclusion of the Hawks transaction that followed.โ
Thekiso also raised concerns about discrepancies in production records.
โAnother issue which I think might not amount to much in the end, but itโs something that caused us a bit of anxiety initially, isโฆ we engaged Dr. Leon Daniels to reconcile our production figures with tailings,โ he said.
During the review, Daniels identified a consistent 10 percent shortfall between the plant production calculations and the final gold poured.
โA preliminary investigation estimates the revenue shortfall will be in the region of P370 million, from January 2014 to March 2024,โ Thekiso said.
He added that there is no record of management addressing or reporting the discrepancies, nor any evidence that financial managers raised concerns about the shortfalls.
โMy discussions with Cedrick Sam reveal that they were never aware of the significant discrepancies between the two, and that it can be explained by what they called gold in-circulation reconciliation. He asserts that this is standard mining practice and should not be surprising. I still think further inquiry is needed to determine the potential financial recoveries for creditors,โ said Thekiso.
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