Merger talks a ray of hope for Lily Mine

The Star Early Edition - - BUSINESS REPORT - Di­neo Faku

AUS­TRALIAN min­ing com­pany Van­tage Gold­fields is in­volved in merger talks with the Toronto Stock Ex­change listed Galane Gold in a bid to re­open the Lily Mine in Bar­ber­ton, Mpumalanga, where three mine work­ers re­main trapped un­der­ground in a con­tainer.

Business res­cue prac­ti­tioner Rob Dev­ereux yes­ter­day told Business Re­port that doc­u­ments for the merger were “just about signed”, paving the way for the em­bat­tled mine to re­sume op­er­a­tions and in­ject the lo­cal econ­omy.

The planned merger comes af­ter the prom­ise to take over the mine by Cana­dian gold min­ing com­pany AfroCan Re­sources Gold’s chief ex­ec­u­tive Brian Bar­rett fell through amid al­le­ga­tions of fraud last year.

“It has been a long and hard jour­ney for ev­ery­one and this merger means there is light at the end of the tun­nel,” Dev­ereux said. “What it does is to bring jobs which are ur­gently needed, there is not a lot of work in the area. This also af­fected business, sup­pli­ers in the area. The re­open­ing of Lily gives our sup­pli­ers more rev­enue and it is very pos­i­tive.”

Once the merger was con­cluded, Galane would have 100 days in which to raise R200 mil­lion through a place­ment on the Toronto Stock Ex­change. The funds were ex­pected to flow in Oc­to­ber, adding that R130m of the R200m raised would be al­lo­cated for the de­vel­op­ment of the mine, and the bal­ance would be used to pay cred­i­tors and out­stand­ing salaries for em­ploy­ees.

Galane’s as­set Galaxy is 30km away from Van­tage Gold. The com­pany also op­er­ates a mine in Botswana.

Abed­nego Magongo, branch sec­re­tary for the As­so­ci­a­tion of Minework­ers and Con­struc­tion Union said the merger had raised hopes that em­ploy­ees would be able to pro­vide for their fam­i­lies.

“Our in­ter­est is to get our money, re­turn to work and for the com­pany to re­trieve the bod­ies of our three col­leagues from the con­tainer. There were 900 em­ploy­ees at Lily and we are sit­ting at home, mean­ing 10 peo­ple per em­ployee are im­pacted. We have told the com­pany that we will wait pa­tiently for the merger to be fi­nalised,” he said.

Ac­cord­ing to a sta­tus re­port dated July 24, Van­tage sub­mit­ted an im­ple­men­ta­tion deed on the terms of the merger and a fa­cil­ity agree­ment on the funds to be loaned to Van­tage.

The only out­stand­ing doc­u­ment was the pre-bid deed which was re­quired for ma­jor­ity share­hold­ers to con­firm that they were com­mit­ted to the merger.

“Each share­holder is re­quired to sign a pre-bid deed. This process is prov­ing cum­ber­some as many of the share­hold­ers have shares held in nom­i­nee com­pa­nies all over the world and th­ese com­pa­nies are re­quired to sign this doc­u­ment on be­half of share­hold­ers,” read the re­port.

Van­tage owns Lily and Bar­brooke Mine, which were moth­balled af­ter run­ning into fi­nan­cial dif­fi­cul­ties in 2016 and were placed in business res­cue.

In terms of the re-open­ing of the mine, Galane con­ducted a due dili­gence with cost assess­ment and geotech­ni­cal assess­ment and it was agreed that a de­cline shaft was the best so­lu­tion. “This will com­mence soon­est and will take 8 to 10 months as de­fined in the business res­cue plan.”

Cred­i­tors were meant to have been paid at the end of May, but the tim­ing of the Galane merger af­fected the tim­ing of the pay­ment.

A por­tion of the monies raised by virtue of the merger will be avail­able in Septem­ber.

The mine had hon­oured its com­mit­ments to fam­i­lies of the three minework­ers Yvonne Mnisi, Pretty Mabuza and Solomon Nyarenda whose bod­ies re­main un­der­ground af­ter they re­ceived R200 000 each.

In this file photo an emer­gency ve­hi­cle ex­its the Van­tage Gold­fields’ Lily Mine near Bar­ber­ton in Mpumalanga, where three em­ploy­ees were buried un­der tons of rock. Merger talks are un­der way to re­open the mine. PHOTO: PHILL MAGAKOE

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