Some light at last for Barbrook and Lily gold mines

A four-year legal battle between Vantage Goldfields Limited (VGL) and Arqomanzi over who gets to control the Barbrook and Lily gold mines in Mpumalanga was settled in the Supreme Court of Appeal (SCA) last week – in favour of Arqomanzi.

The SCA has now dismissed two appeals by Vantage, the erstwhile operator of the mines, challenging Arqomanzi’s claim to be a creditor after it emerged as a front-runner to acquire control of the mines when it purchased loan claims from Standard Bank.

This made Arqomanzi the largest creditor in VGL, which was placed in business rescue in 2016 when a crown pillar collapse engorged a container with three miners inside – Pretty Nkambule, Solomon Nyirenda and Yvonne Mnisi. Their bodies have yet to be retrieved, as the tussle over who gets to restart the mines has been locked up in legal battles ever since.

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The SCA ruling now clears the path for business rescue practitioners (BRPs) Rob Devereux and Daniel Terblanche to publish amended their business rescue plans and put them before creditors for approval.

Arqomanzi, as the largest and independent creditor, must be given an opportunity to vote on the amended business rescue plans. This also makes it the most likely contender to take control of the mines.

Legal challenges

Vantage, owned by Australia’s Macquarie Metals, challenged the legality of Hong Kong-backed Arqomanzi acquiring Standard Bank’s loan claims of R391 million and R189 million in two of the companies that control Barbrook and Lily.

The Mpumalanga High Court had earlier ruled that the transaction was lawful, though Vantage disagreed and took it on appeal to the SCA. The SCA confirmed the lower court’s ruling.

The SCA also rejected Vantage’s claim that Arqomanzi was not an independent creditor as it was not related to any of the Vantage companies.

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There was also a dispute as to whether the loan claims acquired by Arqomanzi were subordinated, which, if true, meant that Arqomanzi would have little or no voting power on the rescue plans. This had already been decided in Arqomanzi’s favour in the Mpumalanga High Court, and the SCA agreed with this view. Costs were awarded against Vantage.

Ministerial approval

Another bone of contention was whether Macquarie Metals’ acquisition of Vantage in 2020 required ministerial approval under Section 11 of the Mineral and Petroleum Resources Development Act.

Read: Australian group Macquarie Metals comes to rescue of Vantage Goldfields

Vantage has a controlling interest in both Barbrook and Lily’s controlling company, Mimco. Control of these mines passed to Macquarie, but both the lower court and the SCA ruled that this requires ministerial approval.

This means the mines cannot be operated by Vantage or any other operator without first obtaining ministerial consent.

Conflicting statements

In a statement issued last week, Vantage Goldfields said the SCA ruling provided clarity “to allow [the] Vantage Goldfields investor group to access R450 million in secured funding to progress the way forward for the companies in business rescue”.

“We look forward to the long-awaited re-opening of the mines,” it said.

This was not how Arqomanzi, which put out a statement of its own, saw it.

“The BRPs have prepared drafts of new business rescue plans and Arqomanzi will be meeting with the BRPs during next week to progress towards publication of these plans and the convening of the meetings of creditors to consider and vote on them,” reads the Arqomanzi statement.

“Arqomanzi continues to actively engage with the BRPs and creditors will be informed of developments in due course.

“Finally, Arqomanzi wishes to remind creditors to carefully consider that Vantage has lost three cases in the High Court and has had two appeals dismissed by the Supreme Court of Appeal.

“Further, over a period of more than seven years, Vantage has done nothing to assist its former employees,” it added.

Creditors will now finally have a chance to vote on the business rescue plans and decide who gets to operate the mines.

Read: Lily Mine: Lest we forget