Business

Battle for Lilly Mine rages on

2019-09-01 17:20

Siyakhula Sonke Corporation (SSC) subsidiary Flaming Silver Trading 373 has filed court papers to appeal a high court decision that declared its sale agreement with the owners of Lily and Barbrook mines in Mpumalanga null and void.

SSC Flaming Silver has been at loggerheads with Vantage Goldfields Limited (VGO) since the companies signed the sale agreement, which gave SSC a 74% stake in Vantage Goldfields SA, on November 1.

VGO cancelled the agreement in March after alleging that Flaming Silver did not have the R310 million capital injection needed to re-open the mines in Louisville near Barberton. SSC has denied this claim, and the business rescue practitioner’s report has confirmed the company produced proof of its finances.

Both mines were shut down and put under business rescue after the collapse of an entrance to Lily Mine on February 5 2016, which caused the death of three workers.

Read: Lily mine court battle enters another round

SSC Flaming Silver approached the Supreme Court of Appeal in Bloemfontein this week after the Mbombela High Court dismissed its application for leave to appeal three weeks ago.

The high court had found that the sale agreement was null and void because a board meeting that made a decision about a fourth addendum to the sale agreement was not properly constituted.

Flaming Silver’s former director, Ferdi Dippenaar, brought an application to alert the court to this when the company brought an application to force VGO to hand over share documents in line with the sale agreement.

In the Supreme Court of Appeal application, SSC CEO Fred Arendse says that his company has reasonable prospects of success because:

. The court did not consider that Dippenaar had enough information before the round-robin resolution was taken;

. The court accepts that it decided on a non-issue when it premised its judgment on the lack of notice of the board meeting on November 1, which did not take place;

. The court erred in its conclusion because the notice requirement set in section 73 of the Companies Act applies to convened board meetings and not round-robin resolutions made in section 74 of the act.

Arendse said that Dippenaar had received notice of the matter to be decided and had stated that “the resolution cannot be supported”.

Arendse said that the court still had to adjudicate whether the sale agreement was validly cancelled by VGO.

“The decision by the [Mbombela High Court] does not dispose of all the issues in the case, and an appeal would lead to the just and prompt resolution of the real issues between the applicant (SSC Flaming Silver), on the one hand, and the first (VGO) and fifth (Dippenaar) respondents on the other,” he said.

VGO chief executive Mike McChesney did not respond to written questions.

PIC ‘COLLAPSED’ SSC’S DEAL

City Press has seen letters that Arendse wrote to the Public Investment Corporation (PIC) alleging that the asset management firm connived with VGO to cancel their deal to buy the mines.

In a letter dated March 25, Arendse wrote to then PIC acting CEO Matshepo More to complain that the PIC allegedly committed R400 million to VGO if the SSC agreement collapsed.

SSC Flaming Silver had applied for funding from the PIC, but its request was rejected.

On August 8, he again wrote to the PIC to ask why he had not received a response.

Arendse had alleged that SSC had learnt that certain individuals, who purport to be “politically connected”, were working with business rescue practitioner Rob Devereux and the current VGO directors to collapse the binding sale of shares agreement.

“They have communicated that the PIC has committed R400 million for their transaction, provided they collapse our current binding transaction,” he said.

Both mines were shut down and put under business rescue after the collapse of an entrance to Lily Mine on February 5 2016, which caused the death of three workers.

“Furthermore, if this is true, we would find it extremely unethical and irregular, especially after the PIC declined our application for funding as per the attached letter received from the PIC on October 22 2018.

“It would be appreciated if the PIC could respond to this letter, and confirm or deny the above-mentioned allegation, as a matter of urgency,” Arendse added.

PIC spokesperson Deon Botha did not respond to written questions.


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November 10 2019