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The drawn-out boardroom squabble between Vantage Goldfields SA and the new owners of Lily Mine in Mpumalanga is generating tension and causing fear among community members.
Residents of Louisville near Barberton have been camping outside the mine since Wednesday in an attempt to pressure Vantage Goldfields management to stop stalling the reopening of the mine and hand over the necessary documents to Siyakhula Sonke Empowerment Corporation (SSC) and its subsidiary Flaming Silver.
Lily and its sister mine Barbrook were placed under business rescue in 2016 following the collapse of an entrance to one of Lily Mine’s shafts, which buried three workers underground. According to the business rescue plan, an investment of R310 million was needed to reopen the mine.
Vantage Goldfields sold a 74% shareholding to SCC Flaming Silver last year, but is refusing to hand over the share certificates and directors’ resignations to the new owners, despite the department of mineral resources’ approval of the transaction.
Community members spoke on condition of anonymity because they fear they will be targeted.
One said: “As the community, we’ve laid our hands on a lot of information regarding this transaction and all we know was that department had to approve the transaction before the mines could be opened. The department did this, but Vantage Goldfields is stalling.
“Vantage Goldfields introduced the new company to us and the Lomshiyo Traditional Authority, but they don’t want to see the mine reopened. These two companies have money and can take each other to court for the next five years … what will happen to us in the meantime? We need the jobs.”
Another community member said that Vantage Goldfields had convinced a minority group in the community to support its attempt to stop the reopening of the mine.
“The Vantage Goldfields directors are trying to get more from SSC, which we know has spent more than R20 million already. They’re coming up with ridiculous demands. The fact is that this matter is dividing the community and tensions are high,” he said.
“A false letter that said the community doesn’t want the mine reopened was written and distributed. My worry is that there will be confrontations soon and, where money is involved, people will end up killing each other,” he added.
Vantage Goldfields CEO Mike McChesney said they were also upset by the situation.
“We’re sympathetic to the community’s plight, but I also think there’s a political motive for what they’re doing. We were under pressure to cancel the deal [with SSC] because we haven’t seen the money to reopen the mines,” he said.
Two weeks ago, SSC filed papers in the Pretoria High Court to compel Vantage Goldfields to hand over the documents.
According to documents City Press has seen, Vantage Goldfields is allegedly dragging its feet because it is demanding more than what was initially agreed upon.
Its directors demand their shareholding in the company to be increased from 12% to 26%, which will necessitate the dilution of the employees and community shareholding structure.
Vantage has also allegedly turned down SSC Silver Flaming’s proposal to make a 12% shareholding available to the creditors and convert their debt into a holding instrument as security until their claims are settled.
Its directors have created a R13 million creditor claim for retrenchment packages, which SSC Flaming Silver has disputed. SSC has also disputed McChesney’s R5 million creditor claim by his company Cheston Minerals for “services rendered”.
McChesney has refused to comment about the SSC application because the “matter is sub judice”. However, he said that Vantage Goldfields welcomed the application.
“We welcome it in a way because it’ll bring the matter to finality and we’ll abide by the court’s decision,” the CEO said.
SSC Group CEO Fred Arendse said his company was ready to start mining. The Industrial Development Corporation granted SSC a R190 million loan last year, but the money will only be made available once all documents are transferred to SSC.
Arendse said that his company had secured more funding from other investors. He added that “we just hope that the community’s anger doesn’t get out of hand. On our side, we’re ready to reopen the mines and contribute to the community’s development.”
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