Founder: Turnaround Talk
One of the biggest tragedies that struck the South African mining industry was the collapse of the Lily mine in Barberton, Mpumalanga. On 5 February 2016, the crown pillar located between the roof of levels three and four of the mine collapsed and caved into the old underground workings of the mine. As a result, the lamp room, which was part of the surface infrastructure, also fell in and was buried under the rubble.
Up to this point, the Lily mine was very profitable and produced some of the best yields in the country. However, following the tragedy, Vantage Goldfields, Barbrook and Mimco (the owners of the Lily mine) were placed into business rescue as the mine became inoperational.
The incident has been the subject of numerous investigations and enquiries, none of which have been favourable to the rollout of the mine’s business rescue plan. Now, the mine’s business rescue practitioners are once again pointing out how litigation delays are damaging the reopening of the mine.
Current disputes
The mine’s business rescue practitioners (BRPs) have pointed out that the current delay is because of a dispute between the mine’s Australian owners and a potential buyer.
The City Press article points out that BRPs Rob Devereux and Daniel Terblanche said in their recent report distributed to creditors on 9 March (2023) that they would await the outcome of the litigation, which has a substantial impact on the business rescue proceedings.
They also said they would follow the order of Mpumalanga High Court judge Johannes Roelofse to draft new business rescue plans. These plans would be based on an offer by Arqomanzi which intends to buy the mine in the face of vehement resistance from Vantage Goldfields.
Image By: Action SA
The article points out that the practitioners are waiting for another court case that will be heard in the Supreme Court of Appeal on 10 May. Vantage Goldfield is appealing a Mpumalanga High Court order which found that the Australian company did not obtain the consent of the Minister of Mineral Resources and Energy to sell its shares to Macquarie Metals.
Vantage Goldfields announced in 2021 that it had sold 98% of its stake to Macquarie Metals and was therefore no longer willing to sell the mine to Arqomanzi with whom they were already involved in litigation on various matters relating to the sale of the mine.
Reasonable prospect
The article points out that The business rescue practitioners reported that they were continuing with their endeavours to liaise with interested parties.
“The BRPs still believe that there is a reasonable prospect of rescuing the three companies under business rescue or to at least create a better result for the creditors than under liquidation circumstances. Accordingly, the [practitioners] are continuing with their endeavours to bring the business rescue proceedings of the three companies to a successful conclusion. [They] will keep the affected persons informed of all material changes in respect of the respective business rescue proceedings,” Devereux and Terblanche reported.
Image By: Ernst & Young
Delays and regulatory reform
One of the main criticisms of the business rescue process is its slowness. This obviously has significant ramifications when considering the emotional trauma associated with implementing a business rescue plan.
While the delays in this case are from disputes in the sale of the mine, the need for regulatory reform cannot be ignored. There is growing sentiment among business rescue professionals that some of the delays in the profession are not caused by BRPs but by legislation.
All sides need to play a fair game.
