Lily Mine to stay closed despite talk of IDC injection

Community members at a meeting between mine management, Minister Mosebenzi Zwane, Mpumalanga Premier, David Mabuza, and families affected by the Lily Mine disaster. (Supplied)
Community members at a meeting between mine management, Minister Mosebenzi Zwane, Mpumalanga Premier, David Mabuza, and families affected by the Lily Mine disaster. (Supplied)

Johannesburg - Mpumalanga’s Lily Mine will remain closed for now, contrary to reports of a R319 million cash injection from the Industrial Development Corporation (IDC).

The IDC denied it approved the amount to reopen the mine owned by Australian company, Vantage Goldfields.

This despite Mineral Resources Deputy Minister Godfrey Oliphant’s announcement about the investment at the Bench Marks Foundation conference last month.

IDC spokesperson Chimwemwe Mwanza said the corporation had not received any formal application for the investment.

“The IDC has not received any formal request for funding from any business entity to invest in Lily Mine.

"Though there have been informal enquiries, these have not amounted to any formal application to date. We are therefore not in a position to comment further on the matter,” Mwanza said.

Lily Mine, which is situated in Louisville outside Barberton, was shut down two years ago after the entrance to its shaft collapsed and left three workers – who were working in a container office – trapped in the bowels of the earth.

About 1 000 workers subsequently lost their jobs.

Vantage Goldfields put the mine under business rescue, but has struggled to get investors – despite its 4.9 million tons of ore reserves that could be mined for another 11 years.

With the right investment, the mine could return to profitability within two months.

The company needs R300 million to resume operations.

Of that, R200 million is needed to open a new shaft and R100 million to recommission a smaller sister mine, Babrook.

The latter was also closed down after it could not take the financial strain of Lily Mine.

Two potential deals have already fallen through.

The first pledge of $11 million (R172 million) came from Canadian company AfroCan Resources Gold last year.

The deal fell through after Vantage Goldfields accused the company of corruption.

AfroCan would have owned a 26% stake after the transaction was completed.

Another Canadian company, Galane Gold, was due to buy a 50% shareholding in Vantage Goldfields, but the deal fell through as a result of a disagreement about details of the merger.

Business rescue practitioner Rob Devereux said that he was still talking to potential investors and was currently engaging two South African companies.

“The road ahead is pretty clear, but I can’t divulge details because we’ve signed confidentiality agreements. We’re also still speaking to the IDC,” Devereux said.

He said the mine was under care and maintenance had remained with six staff members.

“We process dust and sell some gold to keep security on site and ensure that the plant and equipment remain intact”, said Devereux.

National Union of Mineworkers deputy president Joseph Montisetsi said the union was disappointed with the lack of progress.

“We think that Lily Mine management impose undesirable conditions on investors.

"A new investor can’t entrust the same management with the mine. Our major concern is the workers underground and we hope that government will intervene,” Montisetsi said.

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