NAMCO Maritime, one of the many subsidiaries of the Namibian Mineral Corporation, was placed in provisional liquidation yesterday, in what could be the beginning of the end for the mining group.

High Court Judge Annel Silungwe granted an urgent application for Namco Maritime be placed in provisional liquidation.

Namco Maritime's main function has been to administer the bewildering array of other companies within the group, especially the mining divisions which actually do the diamond extraction work.

A hearing was scheduled for February 3 next year, at which any interested party can give reasons why they are opposed to the final winding up of the company.

Unless an investor or buyer is found for the company in the intervening time, it is likely the company will close down.

In an affidavit, or sworn statement, Namco group Chief Executive Greg Walker said that in the absence of a fresh injection of cash, the company was no longer able to pay its debts.

In 2001 the Group's Namssol sea-bed crawler, launched from the ship MV Kovambo, developed technical problems as a result led the company into insolvency, Walker said.

However, the group was saved from liquidation last year when they were given additional loans of US$27,5 million (N$244,5 million from Leviev's LL Mining Corporation BV (LLMC), US$2,6 million from the Namibian Government and US$9,4 million from other lenders.

The old loans were "rescheduled", founder John Alistair Holberton resigned as Chief Executive and a new management team was appointed.

The group owes a number of banks, including Investec Bank of Mauritius, Nedbank of South Africa and the Commercial Bank of Namibia a total of US$50 million.

They also owe LLMC US$12,6 million and US$9,4 million to holders of debentures (loads secured against the company's assets).

Walker said the group entered into talks with LLMC during April 2002 to secure further investment, in order to increase production and raise efficiency - the only way to make Namco group viable in the long term.

A meeting between the Namco group board, Commercial Bank and LLMC was scheduled for December 5.

In the meantime, LLMC continued to advance money to cover cash flow shortfalls.

However, in late November it stopped doing so, putting the group in further difficulty.

At the December 5 meeting, agreement could not be reached on the release of more funding.

Walker said LLMC had made a proposal to advance another US$30 million "under certain conditions".

He did not say what these conditions were, but the banks apparently found them unacceptable.

Namco, through Namco Maritime, could thus not afford to continue paying for chartered vessels and other services beyond 15 December, Walker maintained.

Allowing some of the vessels to continue operating without the support services Namco maritime provides would also be dangerous, he added.

A third party will now be appointed to oversee the company while possible solutions are explored.

If no way is found to rescue the company by February, its assets will have to be sold to pay creditors.

Joseph Iita, Permanent Secretary of the Ministry of Mines and Energy, said they had not received any official notice of the liquidation, and could thus not comment yet.