Business rescue practitioner Rob Devereux yesterday told Business Report that documents for the merger were "just about signed", paving the way for the embattled mine to resume operations and inject the local economy.
The planned merger comes after the promise to take over the mine by Canadian gold mining company AfroCan Resources Gold’s chief executive Brian Barrett fell through amid allegations of fraud last year.
“It has been a long and hard journey for everyone and this merger means there is light at the end of the tunnel,” Devereux said. “What it does is to bring jobs which are urgently needed, there is not a lot of work in the area. This also affected business, suppliers in the area. The reopening of Lily gives our suppliers more revenue and it is very positive.”
Once the merger was concluded, Galane would have 100 days in which to raise R200million through a placement on the Toronto Stock Exchange. The funds were expected to flow in October, adding that R130m of the R200m raised would be allocated for the development of the mine, and the balance would be used to pay creditors and outstanding salaries for employees.
Galane’s asset Galaxy is 30km away from Vantage Gold. The company also operates a mine in Botswana.
Abednego Magongo, branch secretary for the Association of Mineworkers and Construction Union said the merger had raised hopes that employees would be able to provide for their families.
“Our interest is to get our money, return to work and for the company to retrieve the bodies of our three colleagues from the container. There were 900 employees at Lily and we are sitting at home, meaning 10 people per employee are impacted. We have told the company that we will wait patiently for the merger to be finalised,” he said.
According to a status report dated July 24, Vantage submitted an implementation deed on the terms of the merger and a facility agreement on the funds to be loaned to Vantage.
The only outstanding document was the pre-bid deed which was required for majority shareholders to confirm that they were committed to the merger.
“Each shareholder is required to sign a pre-bid deed. This process is proving cumbersome as many of the shareholders have shares held in nominee companies all over the world and these companies are required to sign this document on behalf of shareholders,” read the report.
Vantage owns Lily and Barbrooke Mine, which were mothballed after running into financial difficulties in 2016 and were placed in business rescue.
In terms of the re-opening of the mine, Galane conducted a due diligence with cost assessment and geotechnical assessment and it was agreed that a decline shaft was the best solution. “This will commence soonest and will take 8 to 10 months as defined in the business rescue plan.”
Creditors were meant to have been paid at the end of May, but the timing of the Galane merger affected the timing of the payment.
A portion of the monies raised by virtue of the merger will be available in September.
The mine had honoured its commitments to families of the three mineworkers Yvonne Mnisi, Pretty Mabuza and Solomon Nyarenda whose bodies remain underground after they received R200000 each.