New hope for Lily
Court rules in mine owner’s favour
MBOMBELA - Vantage Goldfields SA (VGSA) is free to engage with new investors and stakeholders to get Lily and Barbrook mines operational again.
Judgement was handed down in the Mpumalanga Division of the High Court in Mbombela on Wednesday in favour of VGSA.
The sales of shares agreement between the company and Flaming Silver Trading 373 was declared unenforceable when judge Hendrik Roelofse declared the agreement relating to the 74 per cent stake Flaming Silver desired to procure in VGSA and its subsidiary Makonjwaan Imperial Mining Corporation (Mimco,) null and void.
Vantage Goldfields operates the Lily and Barbrook mines. Disaster struck Lily Mine on February 5, 2016, when it collapsed after a centre pillar gave way.
As a result, operations came to a standstill and the mine became completely inaccessible. The bodies of three miners still remain tragically buried underground.
Consequently Mimco, a subsidiary of VGSA, was unable to pay its debts and was placed under business rescue.
During October 2017 the business rescue practitioners of VGSA and Mimco conveyed their view that the mines had a reasonable prospect of being salvaged, subject to funding of R310 000 000 being obtained, in order to meet the requirements of the business rescue plans.
Flaming Silver identified the rehabilitation of the mines as an excellent business venture. A sale of shares agreement was entered into between Vantage Goldfields and Flaming Silver on November 1, 2017. It required financing to be procured on terms acceptable to VGSA and its business rescue practitioners.
The condition had to be met before January 31,
2018, or the agreement would lapse and be of no force and effect. Various extensions were agreed upon, in addendums attached to the principal agreement, but the necessary funding was not forthcoming.
On October 31, 2018, Flaming Silver
CEO Fred Arendse concluded the fourth addendum to the principal agreement, which was done without the authority of Flaming Silver’s board.
Roelofse ruled that according to Section 66(1) of the Companies Act 71 of 2008, the affairs of a company must be managed by or under the direction of its board. The fourth addendum to the sale of the shares agreement was declared null and void and Flaming Silver was ordered to pay the costs of the main application.
Mike McChesney, CEO of Vantage Goldfields, declared the ruling a victory, saying VGSA’s primary goal was to reopen the mines, pay creditors and remedy the suffering endured by former employees.
“As a result of the court judgement, VGSA can now move forward with purpose and finalise the funding arrangement, in order to complete the business rescue plan. Meetings are scheduled with the new investors and the joint business rescue practitioners, with the view to cement a new sale agreement for the benefit of all stakeholders,” he said.