Creditors, Vantage still at war over Lily Mine

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Former Lily Mine workers preparing to go underground and assess conditions in order to retrieve bodies of three ex-colleagues
Former Lily Mine workers preparing to go underground and assess conditions in order to retrieve bodies of three ex-colleagues

Creditors of the Lily and Barbrook mines in Mpumalanga have rejected the preferred investor of owner Vantage Goldfields SA (VGSA) and thrown their weight behind the company that VGSA cancelled its sale agreement with.

The Barbrook and Lily Mine Creditors Committee is claiming that Real Win Investments (Pty) Ltd failed to produce proof that it had the funds to reopen the two mines.

Real Win Investments and Arqomanzi, a new entity formed by Siyakhula Sonke Corporation (SSC) Flaming Silver 373 (Pty) Ltd and Taung Gold, made their presentations to the creditors committee on September 4 and they were requested to submit their proof of funds by lunch time on September 6.

The creditors threatened to relodge a high court application to liquidate the mines if the investors failed to produce the proof and promised to support a company that does so.

Arqomanzi submitted its proof on September 5 while Real Win Investments did not.

Both mines were closed in 2016. Their shutdown followed the collapse of an entrance to a shaft at Lily Mine, which claimed the lives of three workers.

The mines’ 1 000 employees were retrenched. The mines were then placed under a business rescue process, which indicated that a R310 million capital injection was needed to reopen the mines.

Creditors are owed about R139 million.

The business rescue plan is promising. It indicated that Lily Mine had 4.9 million tons of ore reserves and, with the right investment, it would return to profitability within two months.

“We are pleased to report that on September 5 2019 we have indeed received proof of funds from the Arqomanzi Group,” reads a letter circulated to the creditors by the creditors committee’s chairperson, Dwaine Koch.

“Real Win Investments, however, failed to submit any proof of funds nor any explanation for such failure and/or any communication for that matter [including from the business rescue practitioners].”

Koch adds: “Taking cognisance of the above, we will now demand that Arqomanzi be provided with the requisite time to embark on a proper due diligence exercise in order to make a factual offer to the creditors.”

The mines’ former workers have also thrown their weight behind Arqomanzi for making concrete promises that it would retrieve the container office that was buried with their three colleagues and re-employee the 1 000 former employees.

SOLID OFFER

Arqomanzi has made a solid offer amounting to R472 million that would focus on re-opening the mines, settling with creditors and ex-employees, sinking the Lily Mine decline, upgrading plant and infrastructure, and creating much-needed employment opportunities.

Business rescue practitioner Rob Devereux, however, said that Real Win did show him their proof of funds.

“There are sufficient funds to re-open the mines. This whole thing is a mess, because of the court case … we can’t operate under sub judice conditions. It’s a sad state of affairs,” Devereux said.

VGSA CEO Mike McChesney also said that he had seen Real Win’s proof of funds.

“The creditors have no right to see the funds and I talk to them through a structure. We have done a deal with Real Win and we could not do it without the funds,” McChesney said.

Real Win has bought 100% of VGSA’s shares. VGSA initially sold a 74% stake to SSC Flaming Silver, but later cancelled the agreement, claiming that SSC did not have the funds to re-open the mines.

SSC has been insisting that it has the funds and was ready to open the mines anytime.

Not prepared to take the cancellation of the agreement lying down, SSC approached the Mbombela High Court to force VGSA to hand over share certificates and other documents.

During that case, former SSC director Ferdi Dippenaar, put his own application to declare the sale agreement null and void because the board that took this decision was not properly constituted – a claim SSC has denied.

Based on Dippenaar’s application, the court declared the sale agreement null and void. SSC has since lodged an appeal at the Supreme Court of Appeal.


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