Lily Mine sale of shares agreement canned for now
VANTAGE GOLDFIELDS, engaged in a tussle with upstart Flaming Silver Trading over reopening of the Lily Mine in Mpumalanga has declared that the sale of shares agreement has been canned. Chief Executive Mike McChesney said Flaming Silver does not have the financial capacity.
Lily and Barbrooke mines are under business rescue, with production halted since February 2016 after a crown pillar collapsed resulting in the bodies of three mineworkers remaining trapped underground until today.
Flaming Silver Trading, the company which wants to reopen the mines, this week filed an urgent court application at the Mpumalanga High Court in Nelspruit arguing that Vantage Goldfields was in breach of their agreement.
Flaming Silver is a special purpose vehicle created by Siyakhula Sonke Empowerment Corporation and its partners for the transaction.
McChesney, however, said Flaming Silver had been unable to reopen the mines after failing to raise sufficient cash to resume operations.
“They (Flaming Silver) will never come up with the money and have never had money for the reopening of the mines,” he said.
The sale of shares agreement was signed on November 1, 2017, a year after the mines went into business rescue in a bid to resuscitate production.
“They have misrepresented themselves and have lied to us for the past 16 months about having funds.
“Unfortunately, this has placed the livelihood of around 1 000 employees and communities at stake,” McChesney said.
In his founding court document, Ferdinad Dippenaar, a former Flaming Silver director and shareholder, said he had expressed concern with Flaming Silver chief executive Fred Arendse that the company did not have money to reopen the mines.
“The only reason why the share of sales agreement cannot be finally implemented and/ or the Industrial Development Corporation (IDC) funding cannot be accessed is that the applicant has failed to secure the required funding, and I submit, persists in its failure to do so,” he said.
He also blamed Arendse for withholding information about the company’s loans, including the R190 million loan agreement with the IDC.
“I submit that the applicant’s failure or refusal to provide particulars of the funding can only be explained on the basis that the applicant is unable to access funding either sufficiently or at all,” said Dippenaar.
Arendse claimed yesterday that Ferdinand was fired from the board due to 11 charges of misconduct. “We always suspected he was in cahoots with McChesney. It is a blatant lie that we do not have funding. “They unlawfully tried to cancel the deal in order to exhort more money.”
Arendse also said Flaming Silver had raised a R60m guarantee in addition to R190m from the IDC.
Arendse told Business Report on Wednesday that Flaming Silver was unable to resume operations, despite providing proof that it had secured sufficient funds to reopen the mines and backing to allow proceeds to flow from creditors.