CAPE TOWN - Merger talks between Toronto-listed Galane Gold and Vantage Goldfields that were aimed at reviving production at Lily Mine in Mpumalanga have collapsed. Trade union Solidarity said yesterday that the negotiations fell through at the last minute last week.
Three mineworkers remain trapped in an underground container at the mine.
Solidarity general secretary Gideon du Plessis said: “In talks with Lily’s top management, I was told that the transaction was cancelled and that Lily’s management is investigating two other options.”
The transaction would have seen Galane and Vantage merging to raise R200 million for the resumption of production in 100 days.
The funds were expected to flow in October. The amount of R130m of the R200m would have been allocated to develop the mine, and the balance used to pay creditors and outstanding salaries.
Galane was a preferred investor because its mine, Galaxy Gold, was 30km from Vantage Gold.
Du Plessis said that the failure of the transaction was a major setback for Lily workers and the surrounding community, which depended on the mine for an income.
“With every transaction that has failed over the past 18 months, it took 6 months before the next potential investor or buyer appeared on the scene,” Du Plessis said.
“The search for a buyer or investor is very important to create job opportunities and to pay workers’ outstanding salaries, but in the meantime only the business rescue practitioner has been enriched.”
Du Plessis said it was now time for the creditors and Lily’s employees to investigate the benefits of liquidation instead of business rescue.
Lily employees Yvonne Mnisi, Pretty Nkambule and Solomon Nyerende remain trapped in an underground container that collapsed in an accident in February last year.
Vantage mothballed its Lily and Barbrook mines after running into financial difficulties last year and placed its operations in business rescue.
Last year, a promise by Brian Barrett, the chief executive of Canadian gold-mining company AfroCan Resources, to take over the mine fell through amid allegations of fraud.
Abednego Magongo, the Association of Mineworkers and Construction Union branch secretary at the Lily and Barbrook mines, also said the proposed deal had fallen through.
Magongo said this meant that the outlook for employees was even bleaker.
“It has been two years since we received an income. We now rely on our children’s child-support grants.
“We are not getting jobs, because surrounding mines are retrenching their employees.”
Magongo said he was expecting to meet with mine management about their plans, adding that the employees were shattered, because their hopes of getting jobs at the mine faded further with the collapse of each proposed transaction.
“Last year, the South African Social Security Agency (Sassa) gave us vouchers to buy food.
"However, we received the last voucher from Sassa in February. Sassa told us we must wait for the new budget before we get vouchers,” he said.