Hopes dashed as Lily mine deal fails at last minute | Fin24
 
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Hopes dashed as Lily mine deal fails at last minute

Aug 14 2017 12:34

Cape Town - The last minute failure of a proposed acquisition of the Lily and Barbrook mines has put not only the affected mineworkers, but the whole community once again in uncertainty.

Gideon du Plessis, general secretary of union Solidarity, said on Monday the intensive negotiations between Galane Gold and Vantage Goldfields failed last week at the last minute. Another Canadian company, AfroCan Resources Gold, reneged on its agreement to bail out Vantage Goldfields with R172m last year.

The Lily mine, near Barberton in Mpumalanga and owned by Australian company Vantage Goldfields, was closed about 18 months ago and put under business rescue, leaving about 1 000 workers jobless.

"Both Vantage Goldfields and Galane Gold (a Canadian company) accused each other of being the reason for this failed transaction, but it is the workers who pay the price," Du Plessis said in a statement.

"As a result of the proposed acquisition of Vantage by Galane, the mines under business rescue would have been in a position to be operational again within 100 days. Meanwhile, creditors, including the workers, would have started to receive their outstanding money."

Business rescue

The mines have been battling to raise R300m in investment to restart operations.

According to Du Plessis, the workers, who were plunged into poverty after the Lily and neighbouring Barbrook mines were placed under business rescue, were very excited when Galane had already completed a successful sustainability study and when the deal would have been finalised last week.

"Literally a few hours before the final signing, the parties called each other out on technical points which led to the transaction’s cancellation," said Du Plessis.

In talks with Lily’s top management he was told that the transaction was cancelled and that Lily’s management is investigating two other options.

“With every transaction that has failed over the past 18 months, it took six months before a next potential investor or buyer appeared on the scene. The search for a buyer or investor is very important to create job opportunities and to pay workers' outstanding salaries...," claims Du Plessis.

"It is now time for the creditors and Lily workers to investigate the pros and cons of a liquidation process against business rescue. Certainty about what the future holds is also important, because until now, only false hope has been created for the workers, and it is no use to delay the inevitable if the worst case scenario will eventually come to pass.               "

According to Du Plessis, the legal investigation into the cause of the mining accident at Lily mine has in the meanwhile been concluded and the Department of Mineral Resources’ verdict is expected soon.

The collapse at the mine entrance in February 2016 caused a container office with three workers inside to plunge 60m underground. Seventy-five workers survived because they were already inside the shaft and were rescued unharmed.

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vantage goldfields  |  mpumalanga  |  gold  |  acquisitions  |  mining
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