Cape Town – Employees at the Barbrook Mine, which was placed in business rescue on December 15, will meet with the company’s management team and the appointed business rescue practitioner on January 11 to hear how the process forward will affect them.
Sturns Business Rescue Practitioners and Turnaround Specialists on Wednesday issued a notice informing mine employees of the meeting, which will take place at the offices of the holding company Vantage Goldfields in Nelspruit.
At the meeting the business rescue process, the difference between liquidation and business rescue and the financial prospects of Barbrook will be explained to employees.
Barbrook, a gold mine near Barberton in Mpumalanga, listed on the Australian Stock Exchange through the Australian holding company Vantage Gold Fields in 2010.
Vantage Gold Field’s other asset is the now defunct Lily Mine, which was also placed in business rescue nine months ago when three people fell into a sinkhole in February. The mine is still closed as mining in the area is regarded as unsafe.
READ: Unions unhappy as Lily Mine goes into business rescue
Following the closure, 130 Lily Mine employees were moved to Barbrook, while the rest opted for retrenchment packages.
According to trade union Amcu, 780 workers were affected by Barbrook’s decision to go into business rescue.
In a company notice dated December 15, Barbrook CEO Mike McChesney said the board’s decision to apply for business rescue was on the grounds that the mine is in financial distress and will in all likelihood not be able to pay its debt.
The reasons for its financial woes include the fact that Barbrook had to carry the full cost of services previously shared with Lily Mine, dwindling production due to labour disruptions over months which resulted in significant losses in revenue, and illegal stoppages as well as civil unrest.
“As a result the company is no longer able to generate sufficient profits to meet its short-term obligations,” McChesney said.
He pointed out that there is a “reasonable prospect of rescuing” Barbrook, as the mine has sufficient ore reserves to significantly increase production and become profitable in the short term if the current gold price prevails.
In addition, he believes Barbrook has a qualified and experienced management team to implement a recovery plan, while no liquidation is pending against the company. Read Fin24's top stories trending on Twitter: