Last checked at 16 Dec 2010 07:00
Watermark Global Plc("Watermark" or the "Company")
Shareholder Update
The Board of Watermark wishes to provide shareholders with an update on the situation regarding the Acid Mine Drainage (AMD) project in South Africa, currently being progressed by its wholly-owned subsidiary, Western Utilities Corporation Ltd. ("WUC")
Despite receiving some encouraging comments over recent months from Government officials and statements from the mining industry conveying the seriousness of the situation and the need for urgent action, to date no hard or definite decisions have been made regarding the way the Government wishes to proceed with the treatment of the critical AMD situation on the Witwatersrand.
In principle, the Government has communicated to various parties that it wishes to see a two stage process in which an interim and a long term solution have been proposed. Despite numerous discussions and pronouncements, the detail of these two stages and, crucially, who will pay for them, remains unclear. A Government task force has been established whose role is to collect information, investigate the scope and scale of the problem, determine possible solutions and report back to a Ministerial Committee drawn from the Ministers of the various interested sectors (e.g. water affairs, mining, finance, etc.). The reporting of this task force has been equivocal and clearly outside the timeframes originally proposed. Given that the Ministerial Committee has also not taken the steps to resolve the issue with any urgency, to date there has been no response.
Your Board clearly understands this to be a very unsatisfactory and highly frustrating situation for all the stakeholders in Watermark. At the same time, shareholders need to understand that management has done everything in its power to effect a solution and remains very active in engaging all interested parties - especially Government and industry - to produce a solution. The press in South Africa and pressure groups continue to raise the issue and apply pressure for an outcome. However to date, these efforts have not been successful. Management has participated in several key seminars and conferences on the subject. At this stage, there seems to be broad consensus on what needs to be done among all parties concerned, except Government.
There remains a clear need for an urgent solution and the fact that WUC is well placed to deliver the appropriate solution is also apparent and known to the key stakeholders dealing with this issue. However, at this stage the Company remains unable to provide a definitive timeframe as to when the current situation may be resolved. Accordingly, the Company has continued to manage its cash resources judiciously and reduced its costs in a manner that will enable it to continue to operate on a reduced basis until well into 2011.
Copyright Business Wire 2010