Liquidation may be the last hope for Lily and Barbrook mines

LOW’S CREEK – The fight for ownership of Lily and Barbrook mines may finally be heading for a conclusion when an application for the final liquidation of Vantage Goldfields South Africa (VGSA) is served. The application is expected to be brought this week.

The business rescue practitioners (BRP) appointed for the mining company, Rob Devereux and Daniel Terblanche, said in a statement that a number of parties are interested in acquiring the mines.

VGSA recently cancelled the sale of its shares in the mines to Siyakhula Sonke Empowerment Corporation Silver and its subsidiary, Flaming Silver Trading 373, collectively known as the SSC Group, which is fighting this decision in court.

Lily Mine was closed following a disastrous shaft collapse in February 2016. Barbrook Mine was shut down the same year.

READ MORE: Lily Mine: Hope vanishes as days go by

Adv Dwaine Koch, representing S and B Mining, told Lowvelder that the creditors have been calling for VGSA’s liquidation since Barbrook went into business rescue.

He said the business cannot be rescued under the circumstances. “It is too complicated and scaring away potential investors. As creditors, we support the liquidation process because it will bring about a simplified and transparent bidding process.”

Koch added that time was of the essence. “The infrastructure at Lily Mine needs to be stabilised as a matter of urgency.

“Further collapses could result in the ore reserve to be sterilised which will cause the mine to lose its entire value. This will have disastrous consequences for the whole community.

“We have seen a report signifying that critical plant equipment of great value has already been stolen at Barbrook Mine and that more attempts of theft are made weekly.

“It is extremely important that both Lily and Barbrook mines are rescued together. The value of Lily Mine is its ore body of which material gets treated by Barbrook Mine’s processing plant. You need both entities to ensure a successful operation.”

SSC Group announced in November 2017 that it had obtained a R190 million loan agreement with the Industrial Development Corporation (IDC) to acquire a 74 per cent stake in VGSA. Consent from the Department of Mineral Resources in terms of Section 11 was subsequently granted.

“Since the Section 11 approval, progress has been hampered by VGSA’s lack of cooperation,” claimed SSC CEO, Fred Arendse. They have aimed to reopen start cleaning activities at the mines by March 25.

READ MORE: SSC CEO commits to Lily Mine

“The relationship between VGSA and SSC Silver suddenly changed from a cordial to somewhat hostile and antagonistic. SSC Group, however, has a binding contract and has taken all the steps necessary to protect the integrity of the sale of the shares agreement.

“Our opinion is that VGSA wishes to collapse our binding contract to give way for a new deal that will only benefit them.”

Flaming Silver has hence brought about a court application to compel VGSA to transfer the shares.

Mike McChesney, CEO of VGSA, denied that they stalled the reopening. He said VGSA cancelled the agreement after SSC failed to raise the necessary funds.

“The purpose of the sale was primarily so that they could reopen the mines. They have failed. Last year the joint BRPs opened a bidding process for new offers in the event of the Flaming Silver agreement failing.

“A number of offers were received, of which one has been accepted. Details are in the process of being finalised,” said McChesney.

In a report issued by Devereux and Terblanche, dated April 5, that the respective business rescue proceedings were being prejudiced by the legal actions among some of the major stakeholders, with the effect is that they cannot dispose of the assets, nor can they follow a transparent bidding process that would expedite the reopening.

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“Both Barbrook and Lily mines remain under care and maintenance. They remain secure, but there is no post-commencement funding due to the position in respect of the transfer of shares in VGSA. The lack of funding has, however, led the Mbombela office to be closed.

“All assets of the mines as well as records in the Mbombela office remain under the control of the practitioners and access to these is limited to consent of the practitioners. Security remains intact,” they said. According to Koch, no information of any successful bid or proof of funds has been forthcoming.

“If all these so-called investors are true, then let them participate in a transparent bidding process and let the creditors decide which offer they want to accept. That is all we want – transparency.”

ALSO SEE: Creditors question Lily Mine loan