The Department of Environmental Affairs (DEA) has launched a criminal probe and drafted charges against some of Village Main Reef’s directors and previous directors for alleged statutory contraventions pertaining to pollution or the degradation of the environment at the Blyvooruitzicht (Blyvoor) gold mine outside Johannesburg.
“The charges against the accused in this matter relate to contraventions of specific environmental duties of care, air quality and waste-related infringements,” departmental spokesman Albi Modise said.
He added that while the DEA was not the sector leader when it came to mining-related matters, its involvement in Blyvoor was as a result of the “standard operating procedure that exists between the DEA and the SAPS, which facilitates the investigation of those matters that cut across various environmental media” by the so-called Green Scorpions.
The junior gold producer warned yesterday that the legal action and the criminal charges would have a significant impact on its financial position. The share dropped as much as 9.76 percent yesterday.
“These investigations and legal proceedings could have a materially adverse effect on the company’s consolidated financial position, results of operations and cash flows,” the company said yesterday in its results for the year to June.
Village posted R1.5 billion in revenue from continuing operations in the 12 months to June, which was in line with the previous year.
It said the DEA had requested an opportunity to take statements from the directors, and that the company was seeking legal advice before it did so.
If found guilty, Modise said, “the National Environmental Management Act, together with the specific Environmental Management Acts make provision for significant penalties to be imposed”.
“These penalties range from 10 years imprisonment per offence to fines of up to R10 million per charge being imposed,” he said.
As the directors were being charged in their personal capacities, there was the possibility of imprisonment terms being imposed, he added.
Village cut financial support to Blyvoor operations in July last year and obtained a winding-up order from the South Gauteng High Court. A provisional liquidator has since been appointed.
About R204m was recognised as a profit due to the deconsolidation of Blyvoor.
Village had completed a definitive feasibility study (DFS) at its Lesego platinum project based on a large-scale mine, it said yesterday.
It had also completed a preliminary economic assessment (PEA) and a process to complete a DFS for a small mine option is under way.
The DFS and PEA indicated that developing a mine would be financially attractive, but the company had approached the project realistically. “Village alone has neither the technical skills nor the financial capacity to manage such a project.”
The company said its intention was to dispose of the asset or to find a development partner for the shallow and attractive quality deposit.
The shares hit a low of 37c before recovering the losses to close unchanged at 41c.