Taung Gold makes offer to buy mothballed Lily and Barbrook mines
Companies / 24 July 2019, 5:30pm / Siphelele Dludla
JOHANNESBURG - Taung Gold International on Wednesday made a bid to buy Mpumalanga's mothballed Lily and Barbrook mines, on behalf of a new company (Newco), but did not disclose the amount of their bid.
Lily mine, owned by Australian company Vantage Goldfields, halted operations in Barberton following the ground fall incident in February 2016 in which three workers were trapped and whose bodies are yet to be retrieved.
The nearby Barbrook mine also fell into distress and was placed into business rescue, together with Lily mine, in April 2016.
Taung Gold, the South African gold developer listed in Hong Kong, has made a conditional, binding offer to the joint business rescue practitioners (BRPs) of Vantage Goldfields, Makonjwaan Imperial Mining and Barbrook Mines to acquire the Lily and Barbrook mines in Mpumalanga.
The shareholders in Newco will be Taung Gold and Siyakhula Sonke Empowerment Corporation (SSC). Last year, SCC took control of the mines and received R190 million from the Industrial Development Corporation to restart them.
But Vantage Goldfields cancelled the sale of its shares in the mines to SSC Group and took SCC to court saying that the buyer did not have enough funds to restart the mines and pay outstanding creditors.
Neil Herrick, chief executive of Taung Gold, speaking on behalf of the Newco, said their offer was a viable alternative for the troubled mines.
"Some of these assets have been in business rescue for over three years and, earlier this year, the original business rescue plans were declared to have failed," Herrick said.
"Given the two mines' troubled history and the ongoing litigation relating to them, we believe our offer to the BRPs represents a viable alternative to deliver value for key stakeholders relatively quickly through the formulation and implementation of new business rescue plans."
The search and rescue mission at Lily mine remains suspended because of unstable and highly dangerous conditions.
The mission can only be resumed once enough money is raised to complete a full geotechnical assessment of the stability of the open pit area and underground operations.
Herrick said that key conditions of Newco's offer related primarily to the completion of a due diligence, the adoption of new business rescue plans in accordance with Chapter 6 of the Companies Act, and the securing of all necessary regulatory approvals.
He said the final consideration payable for the assets would be disclosed once the new business rescue plans had been adopted.
"Taung Gold and SSC both like the assets and believe that the potential exists to develop a business that is of value and purpose to its stakeholders and which will include the meaningful participation of the local community and employees," Herrick said.
"Although the relationship between the two Newco shareholders is a recent development, SSC CEO Fred Arendse and I have known each other for some time.
"We recognize the respective qualities of each company’s management and we believe that the relationship is ideally suited to advance our respective and collective interests, given the recent history of the two mines."