Namco sinking into deep red sea

Cash-strapped Namibian Minerals (NMR-T) has placed its South African and Namibian subsidiaries into provisional liquidation, putting a halt to its marine diamond production.

Courts in both countries have appointed parties to manage the assets and liabilities involved. Namibian now has five weeks in which to raise sufficient funds to reverse the orders, failing which the winding-up orders become final.

Namibian, which traded at $10 per share only a year ago, hit a cash crunch in early January after its NamSSol seabed crawler was severely damaged while operating off the coast of Namibia. The disruption comes on the heels of a year of unexpectedly low production and high capital costs, leaving the company in a precarious position.

Still, the speed at which the miner has succumbed is surprising, considering it has made reassurances to the contrary. For instance, only weeks after the accident, Chairman Alastair Holberton stated: “With insurance, the net effect on Namco’s bottom line in the mid-term should be minimal. Of course, the company’s short-term cash flow is affected by the loss of the NamSSol production system.”

The remarks were part of a media release aimed at clarifying a Down Jones article that claimed the company had begun discussions to avoid voluntary liquidation. The claim was three weeks premature.

Nevertheless, Namibian’s attempt to stay afloat is being stymied by the refusal of its lenders both to commit to anything beyond three months and relinquish their security over the MV Ivan Prinsep. The vessel was to have been sold for US$4.4 million, and the banking terms offered appear to be keeping a potential new group of investors at bay.

Namibian’s trading privileges were halted Feb. 23, only to be temporarily restored on the morning of Feb. 27 before being halted again in mid-afternoon. In the interlude, the shares dropped 92 to 39 for a loss of 70% of the company’s market value.