Vantage rescue practitioners say proof of funds provided

Business rescue practitioners have confirmed in a recent report that the purchasers of Mpumalanga’s Lily and Barbrook mines provided them with proof of funds to reopen the two mines.

The report, dated May 21 2019, calls into question why Vantage Goldfields SA and the Barbrook creditors’ committee had insisted that Siyakhula Sonke Corporation (SSC) Flaming Silver SPV did not have the R310 million required to buy the mines.

In the report, by business rescue practitioners Rob Devereux and Daniel Terblanche, it states: “We confirm that proof of funds for the SSC Flaming Silver/Vantage Goldfields transaction has been received by the business rescue practitioners.”

Vantage had signed a sale agreement with SSC Flaming Silver last year, deposing 74% of its shares.

But the mining group has since backtracked and unilaterally cancelled the deal over doubts that SSC Flaming Silver had the funds.

Vantage also announced that it was speaking to other potential buyers.

Last month, SSC Flaming lodged an application with the Mpumalanga High Court to force Vantage to hand over the share documents, demanding that its directors resign.

SSC Flaming Silver has obtained a R190 million loan from the Industrial Development Corporation (IDC) and has engaged other investors for the rest of the money. However, the condition of the IDC loan is that it will be released when Vantage hands over the share certificates.

Asked about the new report, Vantage CEO Mike McChesney was still insistent that SSC Flaming Silver did not have the funds.

“Our position has been, and remains, that Flaming Silver has at no stage had the funds to open the mines. Any assertion to the contrary is false,” he said.

“The agreement was cancelled for reasons of no funding. We respect the principle of refraining from commenting on pending court proceedings,” he added.

Devereux did not respond to written questions.

The report also says Vantage informed the business rescue practitioners that it had signed a conditional offer for the sale of its shares.

“We have received confirmation from the interested party that they have secured enough funding for their endeavours, but that final confirmation in this regard would only be received on completion of their due diligence, which is imminent,” reads the report.

The report claims that Devereux and Terblanche were involved in discussions with a listed mining company that had shown interest in acquiring the Vantage shares.

The business rescue practitioners also met with another listed entity, the report states, which had expressed its willingness to commence with the reprocessing of tailings and with gold recovery projects.

Fred Arendse, the CEO of SSC Flaming Silver, said the report vindicated his company.

“The business rescue practitioners acknowledged that the Section 11 application was granted by the department of mineral resources, dated December 21 2018, ... and that the department consented to the shares being transferred to Flaming Silver.

“Furthermore, in the latest Vantage Goldfields Business Rescue Status Report, circulated to all creditors on May 27 2019, the practitioners confirmed that proof of funding for the Flaming Silver/Vantage Goldfields transaction was indeed received by them.

“This status report has vindicated SSC Flaming Silver, which has maintained for a long time that they have raised sufficient funding, and have provided proof of such to both the business rescue practitioners and the Vantage directors,” said Arendse.

Lily Mine was closed in 2016 after an entrance to the mine shaft collapsed on February 5 of that year. This affected its smaller sister mine, Barbrook, which was also closed. The mines were subsequently placed under business rescue late in 2016.

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