Business

Vantage finds new Lily Mine investors

2019-05-19 11:06

For the past month, Vantage Goldfields SA (VGSA) has been looking for prospective new investors to buy two of its gold mines in Mpumalanga.

This comes after VGSA cancelled the sale agreement of the mines to wholly black-owned company Flaming Silver Trading 373 (Pty) Ltd, a subsidiary of Siyakhula Sonke Empowerment Corporation.

“We have had numerous offers. We have accepted an offer and will announce it once the deal is finalised,” VGSA chief executive Mike McChesney said on Friday. However, he said, the discussions and identity of the investors would remain confidential.

“The business rescue processes are respected and all matters regarding the engagements are appropriately addressed to the business rescue practitioners. Creditors, ex employees, communities and other affected persons will be appropriately engaged in the processes,” he added.

In another development, VGSA directors, who stand accused of reneging on a sale agreement of two Mpumalanga gold mines because of greed, are now being blamed for delaying a court case to settle the dispute.

The much-awaited reopening of Lily and Barbrook mines in Louisville near Barberton has stalled since Vantage signed a sale-of-shares agreement with Flaming Silver Trading on November 1 last year.

Flaming Silver, according to the agreement, acquired 74% of Vantage Goldfields for R310 million – R200 million in cash and the remaining R110 million in kind.

VGSA should have handed over the share documents and its directors should have resigned after the deal was approved by the department of mineral resources, but that has not happened because the company claims that the new owners do not have the required capital.

Flaming Silver director Fred Arendse has repeatedly said the company obtained a R190 million loan from the Industrial Development Corporation (IDC), which would be released once the share documents were handed over, and also raised about R60 million from other investors. The IDC has confirmed this deal.

The company had said it was ready to reopen the mines by March 25 this year.

Flaming Silver lodged a high court application on March 14 in a bid to twist Vantage’s arm to hand over the shares. Arendse declined to comment because “the matter is sub judice”.

According to an internal Flaming Silver document that City Press has seen, Vantage was supposed to file its answering affidavit by March 22, but only did so seven days later. The court then postponed the date for the filing of papers to May 3.

“Flaming Silver filed its final papers on time,” reads the document, “however, VGSA and Mr Ferdinand Dippenaar have yet again failed to do so, causing a further delay in the matter in that it cannot be put on the court roll.”

Dippenaar is a former Flaming Silver director, who has turned his back on the company to support VGSA.

Arendse said his company’s relationship with Dippenaar irretrievably broke down after suspicions that the former director was working “in cahoots” with VGSA.

VGSA filed court papers on May 13, but it is unclear when the matter will be heard.

Meanwhile, Louisville community members have been camping outside the Lily Mine day and night to voice their concern about VGSA’s delay of the mine’s reopening.

This week, former employees said they were planning to go underground and locate the container office that got buried when the entrance to the mine collapsed on February 5 2016.

Three workers – Pretty Nkambule, Yvonne Mnisi and Solomon Nyirenda – were trapped underground in the container and their bodies were never found because dangerous conditions stymied recovery efforts.

McChesney said his company cancelled its agreement with Flaming Silver because of its failure to raise funds in more than 16 months.

“VGSA retains ownership of the shares, the mines and the assets and at no stage did it part with such ownership,” McChesney said.

“Claims that VGSA is deliberately delaying or frustrating the process of a successful transition to new ownership are false. Suggestions that VGSA is similarly delaying litigation aimed at transferring control to a qualified purchaser and that VGSA is refusing to respect court processes are false. Claims that a transfer of ownership and licences to the mining operations took place under the authority of the minister of mineral resources are false,” he said.

McChesney said VGSA stood by its position that the claim of transfer was spurious and that the agreement with Flaming Silver had been cancelled and that Flaming Silver has no right to demand the shares without the money.

Flaming Silver, according to documents City Press has seen, is claiming that VGSA directors have been making more demands such as wanting their shareholding in the company, agreed upon on May 18 last year, to be increased from 12% to 26% by forced dilution of the employee and community shareholding structure.

VGSA has also rejected Silver Flaming’s proposal to make 12% shareholding available to the creditors and proposed a conversion of its debt into a holding instrument as security until claims have been settled.

Furthermore, the documents say, three VGSA directors have created a R13 million creditor claim for retrenchment packages, which Flaming Silver has disputed. Flaming Silver has also disputed McChesney’s R5 million creditor claim of his company, Cheston Minerals (Pty) Ltd, for “services rendered”.


Next on City Press

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining

June 23 2019