Uncertainty surrounds Lily mine investment status, AfroCan responds to allegations

JOHANNESBURG (miningweekly.com) – Canadian gold producer and investment company AfroCan Resources Gold has missed the June 30 deadline to pay South African gold miner Vantage Goldfields an agreed $2.5-million as part of an $11-million investment in the Lily gold mine, in Mpumalanga, trade union Solidarity reported on Monday.

In May, the companies issued a joint statement, saying that AfroCan was in the process of building a portfolio of gold assets and had identified Vantage as a “strategic component” in its plans.

Vantage, which owned and operated the Barbrook and Lily mines, in Barberton, Mpumalanga, entered into business rescue, in April, after ceasing operations at Lily mine in early February owing to a ground collapse, which left three miners trapped underground.

Vantage described that event as a force majeure, adding that a portion of the AfroCan investment would be allocated to the reopening of the Lily mine, while the balance would be used to expand production at the Barbrook operation.

Vantage said the Lily mine could start securing additional post-commencement funding to ensure that it went back into production as soon as possible. The reopening of the mine was expected to take place in the next six to eight months.

Vantage expected to ramp up Lily mine’s production to 50 000 oz/y in the next two years, from the 32 418 oz produced in 2015.

However, Solidarity on Monday said the investment transaction by AfroCan had failed, leaving the mine’s 900 employees in limbo.

Solidarity general secretary Gideon du Plessis alleged that the union had been approached by three persons who had previously had business dealings with AfroCan CEO Brian Barrett, claiming that transactions came to naught and he “just disappeared from the scene”.
 
“Two weeks ago, Barrett addressed Solidarity, the Association of Mineworkers and Construction Union (AMCU) and the Lily mine’s leadership at the Nelspruit head office of Vantage Goldfields, making all kinds of promises and creating many expectations, none of which materialised,” he said.
 
According to Du Plessis, Barrett was regarded as the “knight on the white horse” who brought hope to the mine’s 900 helpless employees that their outstanding salaries of the past three months would finally be paid.

He remarked that Barrett’s investment would also have been used to sink a new shaft in a bid to retrieve the bodies of the three missing miners and to get the mine back into production.

“The Lily miners are devastated and shattered after receiving the news that Barrett had led all by the nose. Based on [his] investment and promises, a large number of workers entered into agreements with their creditors to the effect that they would be able to settle some of their debt this week. The outcome is that even more workers will now be facing sequestration,” Du Plessis explained.
 
He stressed that Solidarity and AMCU, as representatives of the workers, would not let the matter rest.

“This . . . transaction now means that negotiations with other investors, who had shown an interest previously, would have to start afresh, thus delaying the process to find a reputable investor by months,” Du Plessis stated.

Barrett told Mining Weekly Online that AfroCan denied much of the positioning in Solidarity’s media release and noted that certain statements were “mere spurious allegations”.  

“AfroCan has issued a formal communication to Vantage Goldfields setting out its position,” he stated.

Lily Mine’s business rescue practitioner Rob Devereaux also informed Mining Weekly Online that Vantage Goldfields would release a statement regarding the current status of the transaction during the course of Tuesday.