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Push to liquidate ill-fated Lily Mine

Creditors have applied to the court to liquidate the Vantage Goldfields Lily Mine in Mpumalanga.

In April last year, three workers were buried alive after the surface of the Lily Mine caved in when an underground pillar collapsed, destroying nearly half the mining area. Most of the workers climbed out through a ventilation shaft, but three workers were trapped inside a metal container next to the shaft entrance in the hillside.

After the collapse, mining stopped, and maintenance, salary and expenses for the search-and-rescue operation almost drained the mine’s financial resources, resulting in it being placed under business rescue. In its initial rescue plan, the company said it required R300-million to pay for maintenance and settle its debt.

The mine’s fate will be decided at a liquidation application on January  29 in the Mpumalanga High Court, where lawyers for the creditors will argue that liquidation should have taken place long ago. Deysel Attorneys formally brought the application on behalf of Rock Mining Machines.

“We know that the business rescue practitioner Rob Devereux intends to oppose the application. Our case is that he should have liquidated the company himself when the previous deals fell through,” Deysel Attorneys’ Johann Grove said on Wednesday.

“The inevitable has now happened. We think we’ll get a better dividend [if we liquidate now] instead of waiting another 18 months for a deal,” Grove said.

The liquidation will not affect Vantage’s Barbrook Mine, only a few kilometres from Lily Mine, where the company plans to direct its remaining investment.

Since the Lily Mine surface collapsed, Devereux has negotiated investment deals with at least three companies, one of which is the Industrial Development Corporation (IDC), to bail out Vantage Goldfields but none has materialised.

In Devereux’s announcement on October 27, through his Sturns business rescue company, he said the Siyakhula Sonke Empowerment Corporation (SSC) group had agreed to acquire Vantage’s shares in Lily Mine.

This was decided at a meeting held with Deputy Mineral Resources Minister Godfrey Oliphant and the IDC at which the “parties reiterated the support for each other in rescuing the group, of key importance the Lily Mine”, Devereux said.

SSC is a black-owned and -controlled mining and construction company based in Centurion, Gauteng. On November 7, it announced its agreement to buy Vantage Goldfields’ shares and bail out the company, and wanted to introduce its representatives to shareholders.

Pretty Mabuza, Yvonne Mnisi and Solomon Nyarenda were the three workers who died in the metal container, which lies buried nearly 80m underground at the mine near Barberton.

Despite a month-long search-and-rescue operation, mining specialists could not reach the container because the rock above and underneath it was unstable and there was a danger of further collapse.

Two weeks after the accident, speaking at the Lily Mine, Mineral Resources Minister Mosebenzi Zwane promised the families of each of the deceased employees R200 000. The 75 workers who escaped injury were promised R50 000 each. In May this year, the families were compensated in full but the workers received only R10 000 each.

Yet Vantage’s Goldfields’ creditors and former Lily Mine and Barbrook Mine employees, who have now been retrenched, are yet to be paid. General workers, managers, specialists and contractors have not received salaries since June last year and some of the voluntary severance packages agreed to by the bulk of the Lily Mine staff have not been processed.

Although Devereux said the IDC has now “pledged its support to the project and business rescue process”, and that saving Lily Mine will be undertaken by the SSC group, IDC and Oliphant, Grove said they would push for the liquidation.

“Honestly, I cannot see how the court won’t liquidate, unless someone comes up with the cheque for R300-million,” Grove said.

“I would like to express our commitment to working tirelessly to expedite the processes and ensure the speedy implementation of the business rescue plan. We hope to meet you all at a creditors’ meeting to be arranged by [Devereux] in the next few weeks,” SSC founder and chief executive Fred Arendse said.

Grove was perplexed by Vantage Goldfields’ difficulty in finding someone to rescue the company before it was liquidated.

“I can’t understand why the government hasn’t stepped in because it’s a viable mine. The IDC can’t sign the deal because of the liquidation application.

But all their plans will hang in limbo until the court rules.

In addition to the R300-million needed to pay creditors, Lily Mine also requires another R100-million to rehabilitate the area where the collapse happened and retrieve the metal container from underground,” Grove said.

In his responding papers to Rock Mining Machine’s application, Devereux sets out how the attempts to secure deals with AfroCan Limited Resources, Galane Gold and the initial request for funds from the IDC all failed.

But he is not sure when the workers who had still not received salaries or voluntary severance packages would be paid.

Nyarenda’s brother, Kennedy, this week said he had taken responsibility for looking after his sibling’s surviving children, and his wife had been looking for part-time jobs.

“The compensation has made a big difference. At least things are not so bad now, especially because it’s Christmas.

“But next year, my brother’s wife will have to get a permanent job or they will look at me to provide,” he said.

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Govan Whittles

Govan Whittles is a general news and political multimedia journalist at the Mail & Guardian. Born in King William's Town in the Eastern Cape, he cut his teeth as a radio journalist at Primedia Broadcasting. He produced two documentaries and one short film for the Walter Sisulu University, and enjoys writing about grassroots issues, national politics, identity, heritage and hip-hop culture.

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