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IDC loans R190m to firm to buy stake in Vantage Goldfields

Apr 01 2018 08:35
Sizwe Sama Yende

A local minerals and investments company has signed a R190 million loan with the Industrial Development Corporation (IDC) to acquire a 74% stake in the cash-strapped Vantage Goldfields SA to reopen two Mpumalanga mines. Siyakhula Sonke Empowerment Corporation (SSC) Flaming Silver signed the loan deal on Thursday afternoon.

This agreement will enable SSC to reopen the Lily and Barbrook mines in Mpumalanga, which were shut down and later placed under business rescue in 2016.

Vantage Goldfields was forced to close down Lily Mine when the entrance to its shaft collapsed in February 2016.

Three workers – Yvonne Mnisi, Pretty Nkambule and Solomon Nyerende – who were working in a container office, were buried underground.

Lily Mine employed 900 workers and Barbrook employed 100 before operations were mothballed.

According to the business rescue plan, Vantage Goldfields needs R310 million to reopen the two mines.

Lily Mine needs a new shaft; Barbrook will be able to resume production immediately.

Business rescue practitioner Rob Devereux said SSC would contribute the difference of R120 million and get the gold mines back into operation.

“It’s been a long way. It’s a good thing we can open the mine. Barbrook will start production immediately and Lily mine will start with a decline,” Devereux said.

The SSC breakthrough comes after two previous deals failed, placing the mines under business rescue.

Canadian companies – AfroCan Resources Gold and Galane Gold – withdrew their interest to invest following unresolved disagreements with Vantage Goldfields.

SSC CEO Fred Arendse said the company entered into a definitive agreement with Vantage Goldfields to acquire 74% in November last year.

Arendse has 22 years of experience in the mining industry, including working for JCI’s coal division and Anglo American, according to the SSC website.

“The binding funding agreements were signed by the IDC and SSC Flaming Silver on March 29 2018 and are subject to the normal conditions precedent and to the execution of the necessary processes between the IDC and Vantage Goldfields,” Arendse said.

The SSC has provided the required additional equity in addition to the IDC loan facility.

“The funding is sufficient to take both businesses out of business rescue,” Arendse said. “The SSC Group has been involved in the business rescue process of these operations for an extended period during which time SSC management became acutely aware of the situation and the challenges faced, as well as the failed attempts that the shareholders of Vantage experienced in taking the company out of business rescue.

“This investment is an important development for the SSC Group in establishing itself as a mining company and will provide much-needed support to the Mpumalanga local economy at an extremely difficult time, reinforcing our commitment to sustain and grow our investments in this country,” he said.

IDC spokesperson Chimwemwe Mwanza said the transaction was subject to the mine owners obtaining the required mining regulatory permit, including the execution of several conditions precedent between the IDC and Vantage Goldfields.

Head of metals and mining strategic business unit at the IDC Mazwi Tunyiswa said: “This transaction is in line with our mandate of both creating and sustaining jobs especially given the challenging economic environment. The closure of Lily Mine which subsequently led to the closure of Barbrook Mine has impacted negatively on Barberton and the surrounding communities.”

But the deal has not yet prompted creditors to withdraw their application to liquidate Vantage Goldfields. The company owes creditors R139 million.

Barbrook creditors’ chairperson Dwaine Koch said they were not informed about the deal. “We have no clue what that agreement entails as we were not consulted. We are going ahead with the liquidation and we will not back down until our money is in the account.”

The next court hearing brought by the Vantage Goldfields’ creditors to liquidate the company is due to be heard on May 10.

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vantage goldfields  |  idc
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