After three years in business rescue, Vantage Goldfields is headed for the knackers yard unless a buyer emerges in the next few days.
The company was placed in business rescue after a support pillar at Lily gold mine in Mpumalanga collapsed, claiming the lives of three workers. Lily and its sister mine Barbrook are owned by Vantage Goldfields SA (VGSA).
In January, empowerment company Siyakhula Sonke Corporation (SSC) and its subsidiary Flaming Silver were granted conditional approval for the transfer of control of mining rights by the department of mineral resources (DMR).
Flaming Silver CEO Fred Arendse announced that the offer to purchase Vantage Goldfields had become unconditional. Everything was in place, it seemed, except the money.
Business rescue practitioners Rob Devereux and Daniel Terblanche issued a statement yesterday saying Flaming Silver had still not come up with proof of the funds needed to purchase the mines. There is also no proof that the shares have been transferred to Flaming Silver by Vantage Goldfields.
Acting as the owner
But it seems SSC is carrying on as if it is the rightful owner of the mines. “We are aware that the SSC Group called a meeting with creditors in Nelspruit and that a number of issues were discussed in respect of the three engagements. Kindly note that this was not a statutory creditors meeting,” says the statement from the practitioners.
Other bidders have reportedly expressed interest in acquiring the Vantage assets, but unless the deal is closed within the next few days, liquidation proceedings will commence.
Both Barbrook and Lily remain under care and maintenance. “The mines remain secure, but there is no post-commencement funding due to the position in respect of the transfer of shares by VGSA.”
Vantage shut its Nelspruit office late last year, apparently due to lack of funding. Since the office closure, VGSA’s records and assets have been under the control of the rescue practitioners.
No plan, and no funding
“We have no proof of funds to support the reopening of the mines, even though we have received confirmation that discussions are being held with interested parties in this regard. We have also not received a copy of the anticipated new financial model to reopen the mine, but have been informed that such a plan is being finalised. No post-commencement funding is forthcoming.”
In terms of the Companies Act, post-commencement financing provides a measure of security for the new owner of the rescued companies so that it does not get swallowed by outstanding creditors. In terms of the Act, the first to be paid out of post-commencement finance are the rescue practitioners, employees and working capital needed to revive the business, with creditors being paid out of future cash income.
In December 2018 the rescue practitioners opened the door for alternative bids but unless these are forthcoming they have instructed their attorneys to commence with liquidation proceedings. “Should we receive confirmation that the funding is in place and that the shares have been transferred to Flaming Silver we would re-consider our position.”
Unless proof of funds is received within the next week, the application for liquidation of the VGSA subsidiaries in business rescue will proceed.
This means that roughly 1 000 miners, who have been without pay for three years, will soon know with certainty whether their jobs are gone or not. The assets have deteriorated with the passage of time, and in the (likely) event of liquidation, will probably be sold off piecemeal for a fraction of their worth had the mines continued.