An amended business rescue plan will see all creditors paid within three months. But a court action by a competing bidder may derail the best laid plans. From Moneyweb.
Five years after the collapse of a support pillar that took the lives of three workers at Vantage Goldfields’ Lily mine in Mpumalanga, there’s light at the end of the tunnel for the company. The 2016 tragedy brought an end to mining operations at Lily and its sister mine, Barbrook, which were then placed in business rescue.
The bodies of Solomon Nyirenda, Yvonne Mnisi and Pretty Nkambule remain buried a Lily mine, and the only way to recover them is to sink a new decline shaft 50 metres below the surface to recover the container in which they were working at the time of the collapse.
The recovery of the bodies has been a critical part of the business rescue plan for the mines. Attempts to revive the mines have been going on for the better part of five years, but have been thwarted by competing offers that have ended up in court.
This week, Vantage Goldfields’ business rescue practitioners (BRPs) accepted an offer to relaunch the shuttered Barbrook and Lily mines by Australian group Macquarie Metals, which last year acquired 98% of Vantage’s parent company, Vantage Goldfields Limited.
Vantage CEO Mike McChesney says the Australian parent will settle creditors, who are owed R212 million, and start with the sinking of a new decline shaft at Lily mine to retrieve the bodies of the deceased workers and revive underground operations at the mine.
“We expect creditors to be paid within the next 60 days and we are already in the process of gathering bank account information of employees who are ready and eager to restart work,” says McChesney.
“By July this year we will recommence operations at Lily and 12 months after that we expect to be recovering gold at Lily Mine. A decision will be taken to recommence operations at Barbrook Mine in short order. Initially we will re-employ roughly 400 to 500 workers, though we expect that to ramp up to 700 and possibly 1 000 over time.”
McChesney says the reboot of the mine has the full support of government, the community and the nearby towns of Louws Creek and Louisville, which were heavily dependent on income from the mines. Due to the shallow mining depths, Lily is a relatively low-cost mine with an average head grade of 2.5 grams per ton (g/t) while Barbrook’s grades vary between 3.5g/t and 4g/t.
The BRPs have amended the Vantage Goldfields business rescue plan to allow for the payment of 100% of the claims of secured, preferred and concurrent creditors, with 65% of their claims due in 15 days and the balance within 60 days. Concurrent creditors in Makonjwaan Imperial Mining Company (which owns Lily) will receive 30c in the rand paid in two phases over the next 60 days.
Business rescue practitioner Rob Devereux of Qey-West Finance says the Macquarie Metals offer was one of two on the table, and far superior in terms of the benefits to creditors. “Macquarie Metals has the funds available, creditors are going to start getting paid in the next two weeks, and it is eager to start mining. This is a great success story, given the difficulties that Vantage Mining has experienced in the last five years.”
Bump in the road
One potential speed bump on the road is an “extremely urgent” application for an interdict to stop the BRPs proceeding with the business rescue plan, on the grounds that it was unilaterally and unlawfully amended – which is denied by the BRPs.
The application is being brought by competing bidder, Arqomanzi.
Says Devereux: “Arqomanzi wants to stop us paying the 800-plus staff who have been without pay for five years, and their offer was rejected because it proposes paying 60c in the rand to staff, while the Macquarie Metals offer will pay them 100c in the rand within the next 60 days.
“The courts must now decide the way forward. Our responsibility is to the company, and we believe we’ve acted in the best interests of all concerned.”