Lily Mine to stay closed de­spite talk of IDC in­jec­tion

CityPress - - Business - SIZWE SAMA YENDE busi­ness@city­press.co.za

Mpumalanga’s Lily Mine will re­main closed for now, con­trary to re­ports of a R319 mil­lion cash in­jec­tion from the In­dus­trial De­vel­op­ment Cor­po­ra­tion (IDC).

The IDC de­nied it ap­proved the amount to re­open the mine owned by Aus­tralian com­pany, Van­tage Gold­fields. This de­spite Min­eral Re­sources Deputy Min­is­ter God­frey Oliphant’s an­nounce­ment about the in­vest­ment at the Bench Marks Foun­da­tion con­fer­ence last month.

IDC spokesper­son Chimwemwe Mwanza said the cor­po­ra­tion had not re­ceived any for­mal ap­pli­ca­tion for the in­vest­ment.

“The IDC has not re­ceived any for­mal re­quest for fund­ing from any busi­ness en­tity to in­vest in Lily Mine. Though there have been in­for­mal en­quiries, these have not amounted to any for­mal ap­pli­ca­tion to date. We are there­fore not in a po­si­tion to com­ment fur­ther on the mat­ter,” Mwanza said.

Lily Mine, which is sit­u­ated in Louisville out­side Bar­ber­ton, was shut down two years ago af­ter the en­trance to its shaft col­lapsed and left three work­ers – who were work­ing in a con­tainer of­fice – trapped in the bow­els of the earth.

About 1 000 work­ers sub­se­quently lost their jobs.

Van­tage Gold­fields put the mine un­der busi­ness res­cue, but has strug­gled to get in­vestors – de­spite its 4.9 mil­lion tons of ore re­serves that could be mined for an­other 11 years.

With the right in­vest­ment, the mine could re­turn to prof­itabil­ity within two months.

The com­pany needs R300 mil­lion to re­sume op­er­a­tions. Of that, R200 mil­lion is needed to open a new shaft and R100 mil­lion to recom­mis­sion a smaller sis­ter mine, Babrook. The lat­ter was also closed down af­ter it could not take the fi­nan­cial strain of Lily Mine.

Two po­ten­tial deals have al­ready fallen through. The first pledge of $11 mil­lion (R172 mil­lion) came from Cana­dian com­pany AfroCan Re­sources Gold last year. The deal fell through af­ter Van­tage Gold­fields ac­cused the com­pany of cor­rup­tion. AfroCan would have owned a 26% stake af­ter the trans­ac­tion was com­pleted.

An­other Cana­dian com­pany, Galane Gold, was due to buy a 50% share­hold­ing in Van­tage Gold­fields, but the deal fell through as a re­sult of a dis­agree­ment about de­tails of the merger.

Busi­ness res­cue prac­ti­tioner Rob Dev­ereux said that he was still talk­ing to po­ten­tial in­vestors and was cur­rently en­gag­ing two South African com­pa­nies.

“The road ahead is pretty clear, but I can’t di­vulge de­tails be­cause we’ve signed con­fi­den­tial­ity agree­ments. We’re also still speak­ing to the IDC,” Dev­ereux said.

He said the mine was un­der care and main­te­nance had re­mained with six staff mem­bers.

“We process dust and sell some gold to keep se­cu­rity on site and en­sure that the plant and equip­ment re­main in­tact”, said Dev­ereux.

Na­tional Union of Minework­ers deputy pres­i­dent Joseph Mon­tisetsi said the union was dis­ap­pointed with the lack of progress.

“We think that Lily Mine man­age­ment im­pose un­de­sir­able con­di­tions on in­vestors. A new in­vestor can’t en­trust the same man­age­ment with the mine. Our ma­jor con­cern is the work­ers un­der­ground and we hope that gov­ern­ment will in­ter­vene,” Mon­tisetsi said.

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