JOHANNESBURG - LILY Gold Mine business rescue practitioner Rob Devereux says the collapse of talks to merge Canadian-based Galane Gold and Vantage Goldfields and reviving production at the Mpumalanga operation was disappointing.
“The outcome is surprising and disappointing for Vantage and, despite the best efforts, the parties could not conclude the merger,” Devereux said yesterday.
Galane, which owns the Galaxy mine, also in Mpumalanga, and an operation in Botswana, officially withdrew from the merger on August 9. Devereux said there had been an urgent meeting with the Deputy Minister of Mineral Resources, Godfrey Oliphant this week to find solutions. “We have agreed on a way forward by engaging with the Industrial Development Corporation (IDC).
An IDC spokesperson said on Thursday that the national development finance institution had not yet been approached.
Last year the IDC said that Vantage, the owner of Lily Mine and Barbrook mines in Barberton, Mpumalanga, had requested R250million for funding. At the time the IDC had said that the request would be considered based on the economic merit of the proposed business rescue plan.
Galane chief executive Nick Brodie reportedly said the company had terminated discussions after Vantage failed to meet conditions entered into in the letter of intent (LOI) for a variety of reasons, despite their best efforts.
In a letter dated August 9, Brodie said Galane had provided five extensions to the original LOI and would not extend further.
“The situation at Vantage is complex, with the company’s subsidiaries in business rescue and its key operating mine having suffered a tragic accident in 2016.
"Lily mineworkers Yvonne Mnisi, Pretty Nkambule and Solomon Nyende remain trapped in an underground container following an accident last February.
Vantage-owned Lily and Barbrook were placed in business rescue after running into financial difficulties.
Brodie said Galane had proposed that a solution would be to first restart the Lily mine and subsequently the Barbrook mine, and pay off the creditors. It had provided an acquisition agreement that was in line with the LOI.
The termination of the discussions follow the failure of last year’s promise by Brian Barrett, chief executive of Canadian gold producer AfroCan Resources, amid fraud allegations.
Trade union Solidarity general secretary Gideon du Plessis said earlier this month that workers who had been plunged into poverty after the Lily and neighbouring Barbrook mines were placed in business rescue, were very excited about the Galane deal.
Du Plessis said that literally a few hours before the final signing, the parties had called each other out on technical points, which led to the cancellation.
“I was told that the transaction was cancelled and that Lily’s management is investigating two other options.”
He said it was a major setback for the Lily workers and the local community that was dependent on an income from the mine, and now the uncertainty started again.
- BUSINESS REPORT