New liquidation applications to be served on Barbrook and Lilly mines
Creditors say they are fed up, but owners warn business rescue is the best way forward.
BARBERTON – The Barbrook Creditors are launching a new bid to have Lily and Barbrook mines liquidated.
Both were placed under business rescue and operations halted after a shaft at Lily collapsed in February 2016.
The Siyakhula Sonke Empowerment Corporation (SSC) is purchasing Vantage Goldfields SA’s shareholding in Vantage Goldfields, which owns Lily and Barbrook mines through the Makonjwaan Imperial Mining Corporation (Mimco).
The sale is pending approval by the Department of Mineral Resources (DMR).
READ MORE: Lily Mine sale only awaits ministerial approval
SSC said it secured a loan of R190 million from the Industrial Development Corporation and R110 million from investors to reopen the two mines.
Operations at Barbrook were set to resume before the end of the year.
This now seems in doubt as the business rescue plan, approved in August, is taking much longer to be implemented than planned.
Provisional liquidation applications against both Barbrook and Lily mines were withdrawn in August, but Dwaine Koch, chairman of the Barbrook
Creditors’ Association are restarting the process.
Koch said the creditors voted to remove business rescue practitioner, Rob Devereux at a meeting on October 24, but he refused to resign.
Siyakhula CEO, Fred Arendse acknowledged this in a letter dated October 25: “We accept and appreciate the frustration being experienced by all parties, which appears is mostly caused by the conduct of the business rescue practitioner, and I assure all creditors that this matter will enjoy the highest attention and commitment from our side”.
He wrote that they were investigating Devereux’s conduct and appealed for calm and cooperation.
Arendse insisted that they have raised sufficient equity and debt funding to effectively take Mimco, Barbrook and Vantage Goldfields out of business rescue, and to open and sustain the operations.
Yet, Koch insists that, to date, Arendse “has failed to provide us with any proof of funds whatsoever”.
He added that they were planning legal action against Devereux and outgoing CEO of Vantage Goldfields Ltd, Mike McChesney.
McChesney told Lowvelder that liquidation was a bad idea. “I understand their frustration. The business rescue plan is not going according to plan in terms of time, but the plan is so much closer to a solution and now, ironically, they apply for liquidation.
“It is the wrong move for the company and creditors. It is a poor solution.
“It will take years and years to finalise. Case studies show it takes up to five years to liquidate a mine. It is not a normal company. The whole thing is very complex. If Barbrook was liquidated the creditors’ share would amount to less than 10 cents on the rand.
“We are all frustrated with the long process. Devereux doesn’t have a good track record of communicating, but the plan hasn’t failed, it is in the process of being implemented.”
Devereux told Lowvelder that an olive branch has been extended to SSC to resolve the issues.”
He said the hold-up for the implementation of the business rescue plan was due to Salamander Mining with which Barbrook is in a joint venture and that “we are busy trying to resolve these issues with all parties concerned as a matter of urgency”.
Lloyd Birrell, Salamander’s director wrote to Devereux on October 18 that they had been rendered unable to perform in terms of the business rescue plan, but that the joint venture could proceed with amended timelines.
Birrel did not respond to the newspaper’s request for comment.
ALSO SEE: Lily and Barbrook mines set to receive R190m cash injection
