The new owners of Mpumalanga’s Lily and Barbrook mines have accused the creditors’ committee chairperson of making “baseless” allegations about their deal to take over the businesses. They accuse him of a conflict of interest.
Barbrook creditors’ committee chairperson Dwaine Koch has been putting pressure on Siyakhula Sonke Corporation (SSC) Group to provide proof that they have received a R190 million loan from the Industrial Development Corporation (IDC), among a list of demands.
Koch has accused business rescue practitioner Rob Devereux of not being in control of the two sister mines’ assets, which are located near Barberton.
The committee is going ahead with its application to liquidate the mines, even though SSC and the IDC struck the deal in March.
SSC owns 74% of Vantage Goldfields South Africa.
The Lily and Barbrook mines were owned by Vantage Goldfields and had been under business rescue since April 2016, when they were shut down. This was after a section of Lily mine collapsed in February that year. Three workers who were in a container office on the surface disappeared into a sinkhole and were buried under tons of rock and soil. Their bodies have still not been recovered.
The two mines needed R310 million to be revived. Since then, Devereux has been struggling to secure investors, until the SSC became interested.
Koch threw mud at the deal and Devereux, alleging that:
. SSC has not provided creditors with proof of funds after the company announced it had purchased the stake. This means the money may not be there;
. SSC deposited R10 million into the trust account of Devereux’s lawyers;
. There is mining at Barbrook, but there is no accountability about the money involved; and
. There is illegal mining at Lily mine.
Koch said the committee would bring an application to attach the R10 million deposited into the trust account, as security.
He said they would sue SSC for damages later if the deal did not go through.
“SSC came in and misled us by saying they’ve got enough money to buy these mines, open them and pay creditors and workers.
“It’s clear that’s not happening and it’s not the truth,” Koch said.
“The business rescue practitioner should have put these mines under provisional liquidation when he realised the deal was not happening. We would have received a better return then than we would have received now, because the value of the mines has depreciated due to illegal mining,” he said.
SSC Group CEO Fred Arendse and Devereux dismissed Koch’s allegations as baseless.
“We have raised sufficient equity and debt funding to effectively take the companies out of business rescue, and to open and sustain the operations. The Vantage Goldfields board are in full support of the transaction and we are working closely to ensure a smooth and successful implementation,” Arendse said.
Arendse wrote to Koch on June 21, saying his allegations were “baseless and ... defame the name of our company”.
CONFLICT OF INTEREST
In his letter he questions Koch’s standing with the creditors’ committee and alleges he is conflicted because of his links with Canadian company Galane Gold, which failed to purchase the mines.
Previously, Galane and another Canadian company AfroCan Resources, were interested in the mines, but their deals fell through.
Arendse said: “We have become aware that Koch wears many hats and portrays himself in various capacities in relation to Vantage Goldfields, such as a consultant to Galane Gold, an employee of S&B Mining Consultants and the chairperson of the Barbrook creditors’ committee.
“It is important to note that Galane Gold had a failed bid to purchase the Vantage Goldfields assets, which left them in a state of disarray and highly disappointed and, we believe, probably resentful towards any party who may appear to be successful in acquiring such assets.”
Koch said he declared everything to the committee.
“There’s nothing to hide. I was appointed legal manager of Galaxy Gold Reef (in which Galane holds a majority stake) and I’m an admitted advocate. Declarations were sent to creditors two years ago,” he said.
According to a letter Devereux’s lawyers, Martins Weir-Smith Attorneys, sent to Koch, he is not entitled to the information he is demanding.
“Since neither the creditors nor the committee hold, or have beneficial interest in any of the shares issued by Barbrook or Lily mine, no financial or related information will be provided by our client unless our client, in his sole and absolute discretion, deems it necessary or appropriate,” reads the letter.
“Certainly, our client will not be badgered or intimidated into providing information to which neither you nor any other third party is entitled,” the lawyers state.* SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.