Lily’s revival waits on legal tug of war
More than three and a half years after a tragic incident at the Vantage Goldfields SA-owned Lily mine near Barberton, the bodies of three workers remain underground, while operations stand idle.
More than three-and-a-half years after the tragedy at the Vantage Goldfields SA-owned Lily mine near Barberton, the bodies of three workers remain underground while operations stand idle.
Standing in the way of the mine’s revival and recovery of the bodies is a legal tussle over the sale of the shuttered operations. The latest in a string of legal actions is an application for leave to appeal at the Supreme Court of Appeal in Bloemfontein, lodged by Flaming Silver Trading, a prospective buyer of the Lily and Barbrook gold mines, against Vantage Goldfields SA. Vantage Goldfields SA is a subsidiary of Australia-listed Vantage Goldfields.
There is renewed hope that the assets can at last be sold now that there are two new offers on the table. One is from Hong Kong-listed Taung Gold International on behalf of its new company, Agromanzi, in which Flaming Silver’s parent company, the SSC Group, will have a 49% stake. Another is from Real Win Investments (RWI), which was cofounded by mining entrepreneur Pius Mokgokong.
Lily mine stopped operating after a groundfall incident on February 5 2016. Subsequently, Vantage Goldfields’s Lily and Barbrook mines were placed into business rescue, a form of bankruptcy protection.
In November 2017, Vantage Goldfields SA entered into a share-sales agreement with Flaming Silver Trading to acquire the mines. But earlier in 2019, Vantage sought to back out over concern that Flaming Silver could not provide the required funding, even though it has a conditional loan of R190m from the Industrial Development Corporation.
In July, Flaming Silver lost its court bid to compel Vantage Goldfields to follow through with the deal.
Flaming Silver’s subsequent request for leave to appeal against the high court’s decision in August was dismissed, and it has now lodged an application with the Supreme Court of Appeal.
Even so, the business-rescue practitioners feel things are looking up now that there are new offers on the table.
“The position the company is in now is better than it has been since closure of the mines, purely because it has two valid offers at hand,” says business rescue practitioner Daniel Terblanche.
Creditors frustrated with the drawn-out process have been threatening liquidation.
“We haven’t been able to institute a successful investment because the situation is too complicated,” says Dwaine Koch, chair of the Lily and Barbrook creditors’ committee.
After bidders presented bids at a meeting in September, the creditors’ committee said it would apply for liquidation if proof of funds were not provided. RWI did not meet the creditors’ deadline, but Agromanzi did, according to Koch.
“They have the necessary funding to open these companies, get them operational again and pay all the creditors.”
In a written response last week, RWI CEO Zandile Mdanda said the proof of funds had now been provided to the business-rescue practitioners.
RWI’s offer is in line with the original, failed business-rescue plan which intended to compensate directors for outstanding monies owed to them, Koch says. Agromanzi’s offer does not.
“That’s something we support,” says Koch. “Why should the directors get paid bonuses etc when this company is worth nothing?”
Eventually, the winning bid will have to be approved by a creditors’ vote. But before that happens, the business-rescue practitioners intend to go to court for a declaratory order for clarity on a number of technical issues.
It is in the interests of expediency as any new deal could be at risk of yet another legal challenge from opposing interests.
Already there are threats of legal action from Flaming Silver over Vantage Goldfields signing an agreement with RWI in March “despite still having an existing binding contract with us”, the SSC Group says in a statement.
But Terblanche sees light at the end of the tunnel. “The two offers are very much competing offers, which present substantial value for creditors,” he says.
THE COMPANY IS IN A BETTER POSITION NOW THAN IT HAS BEEN SINCE CLOSURE OF THE MINES, PURELY BECAUSE IT HAS TWO VALID OFFERS