Vantage Goldfields is headed to court to decide who has the right to acquire the company assets, comprising the Barbrook and Lily gold mines in Mpumalanga.
Vantage was placed in business rescue three years ago after a pillar collapse left three workers dead and nearly 1 000 miners without work. Of the 90 miners trapped underground by the collapse, 87 were rescued.
Earlier this month Vantage cancelled an agreement with Flaming Silver, a subsidiary of Siyakhula Sonke Empowerment Corporation (SSC), to acquire the mine assets after it failed to come up with the money needed to pay off creditors and reopen the mines.
Flaming Silver responded by launching a court action in the Mpumalanga High Court to force Vantage to sell it the shares. The court action is being opposed by Vantage and one of Flaming Silver’s own shareholders, Ferdinand Dippenaar, who filed an affidavit suggesting Flaming Silver was erroneously claiming a R190 million Industrial Development Corporation (IDC) loan commitment to Vantage as its own. Business rescue practitioner Rob Devereux says the R190 million loan from the IDC was subject to Flaming Silver coming up with R50 million capital of its own – which did not materialise.
SSC is due to hold a press conference today (Tuesday), giving its version of events to date. Flaming Silver was granted Section 11 permission to transfer the mining rights by the Department of Mineral Resources but failed to come up with the R310 million required in terms of the share sale agreement, which was due to be paid by January 2018. Despite extensions of the share sale agreement, Flaming Silver could still not come up with the money
In a statement issued last week, Vantage CEO Mike McChesney says the share sale agreement was signed in November 2017 with the purpose of completing the business rescue process and reopening the mines. “Flaming Silver and the SSC Group have consistently represented to Vantage and the business rescue practitioners that they had secured the necessary funding but this was not forthcoming despite assurances that the funds would be advanced by the IDC.
Flaming Silver issued a statement of its own, claiming the transfer of the shares is not yet complete due to Vantage Goldfield’s lack of cooperation and invalid cancellation of the agreement.
“To date, the SSC Group has contributed over R28.1 million to the transaction and the companies; and has a straightforward six-month implementation rescue plan, with defined funding and timelines, which it cannot execute if Vantage Goldfields refuses to complete the transaction. The SSC Group has built strong relationships with the community and its goal to employ approximately 900 employees and generate revenue will be impossible if Vantage Goldfields does not transfer the shares and avert liquidation.”
Devereux says this R28.1 million has not been recognised by Vantage as post-commencement financing. “This relates to costs incurred by SSC with regards to their due diligence and own costs,” he says.
McChesney says Flaming Silver is effectively out of the picture, and other offers are now being considered. “An alternative offer is now in the process of being finalised so that the mines can be reopened as soon as possible in the interests of all stakeholders.”
In a statement issued yesterday, the business rescue practitioners say the rescue proceedings are being prejudiced by the legal actions among some of the major stakeholders. “The effect is that the practitioners cannot dispose of the assets that vest in the three companies, nor can they follow a transparent bidding process that would expedite the reopening of the respective businesses.”