Lily Mine has been handed a R173-million lifeline but none of this money will be used to recover the three bodies still trapped underground, following a collapse earlier this year.
The funds won’t be used to settle the R4.4-million compensation due to the families and survivors of the disaster either.
What the investment by the Canadian resources firm AfroCan Resources Gold means is the mine, near Barberton in Mpumalanga, will no longer have to shut its shafts.
Lily Mine’s parent company, Vantage Goldfields, will put part of the money towards building a new decline shaft, which ultimately might provide access to where Pretty Mabuza, Yvonne Mnisi and Solomon Nyarenda’s bodies are trapped in a metal container, about 800m underground.
The rest of the money will be used to expand production facilities at Lily Mine’s sister mine, Barbrook, increasing production from 32 400 to 50 000 ounces of gold a year.
Despite the huge cash injection, the mine has to apply for additional funding to build the new decline shaft. Lily Mine’s business rescue practitioner, Rob Devereaux, has confirmed that an application to the Industrial Development Corporation (IDC) for the additional funding is at an advanced stage. Once the money for the new shaft, estimated at roughly R200-million, has been secured, work on a new decline will begin.
“AfroCan is investing $11-million. Lily Mine plans to develop a new decline shaft over six to eight months. Then another two months is needed to commission equipment underground.
“So, realistically, the mine will only start production around May 2017. This money is only used to develop the decline. We have asked the IDC for the additional funds to build the decline and to pay compensation to families and surviving workers,” Devereaux said.
Seventy-five workers survived the collapse in February. There have been three unsuccessful attempts to recover the three bodies. The mine has shut down, leaving workers and their families, who live in the nearby villages, without an income and reliant on government food parcels.
Lily Mine employees are owed salaries from April and May, as well as allowances and overtime pay. Last week, the Mail & Guardian reported that the company’s monthly wage bill is about R10-million, and there is uncertainty over whether workers will apply for voluntary severance packages being offered by the company.
“This investment will address some of the salary issues but obviously we must understand it can’t all go to into salaries because that doesn’t produce anything. We’re running the numbers on what percentage will be allocated,” Devereaux said.
The Association of Mineworkers and Construction Union (Amcu), which represents the majority of the workers at the mine, said it supported the new investment even if it is not enough.
“The investment should be used to recover the container. We welcome it because it’s a step in the right direction. It might not be sufficient but it would be able to pay April salaries. At least there’s hope,” said Amcu’s president, Joseph Mathunjwa.
He said the union is hopeful that additional funding will be secured through the presidency, although it has yet to receive a response to a written request to President Jacob Zuma in February.
“[We] wrote a letter to the president asking him to declare the collapse a national disaster so that more funds could be freed up. He hasn’t responded to us.”
About 370 of the 600 permanent staff at Lily Mine stand to lose their jobs during the construction of the decline shaft because only 230 people will be needed, according to Devereaux.
Amcu says this is why its request to declare Lily Mine a national disaster is legitimate.
“This valley is the future of this community. If those workers lose their jobs, it would add to unemployment in the area and we believe this is why Zuma should intervene,” Mathunjwa said.