Lily Mine pins hopes on business rescue
Lily Mine placed in business rescue as the search for three missing employees takes a toll on its balance sheet.
|||Johannesburg - Lily Mine, the gold mine owned outside Barberton, Mpumalanga, where three miners have been buried underground for nine weeks, has been placed in business rescue as the search for the missing employees takes a toll on its balance sheet.
Lily Mine, a subsidiary of Australia’s Vantage Goldfields, was pinning its hopes on a business rescue to raise funds to continue the rescue mission after suffering a force majeure in February that had halted production.
Read: New hope for retrieval of trapped miners
Yvonne Mnisi, Pretty Mabuza and Solomon Nyarenda were working in a lamp container when the entrance of the mine collapsed, leading to the container falling into the ground and being covered by huge rocks. Scores of others were lucky to escape.
“The mine now has no means of generating income. Despite considerable efforts to raise the necessary finance to resuscitate Mimco (Makonjwaan Imperial Mining Company), the company which owns Lily Mine, this exercise has had its constraints and requires more time,” Vantage Goldfields said on Wednesday.
“A mechanism exists in law for distressed companies, such as Mimco, to avoid job losses, to access capital and to restructure the business, so that it can resume normal operations.
“The directors of Mimco, a subsidiary of Vantage Goldfields, have used this mechanism to place Mimco into business rescue with immediate effect”, it said. Vantage Goldfields and its other subsidiaries, including Barbrook, would continue to operate as normal, it said.
“It should be noted that this decision is not as a result of mismanagement or market conditions. This step was necessary because of a most unpredictable and tragic event.
“The business rescue process will give the company time and protection to raise the necessary funds to resume operations. Lily Mine has considerable ore reserves for many years to come and has a robust operating margin at current gold prices.”
Gideon Du Plessis, the general secretary at trade union Solidarity, said yesterday that the business rescue process was the only way in which the mine and its employees could recover funds.
“Although an application for business rescue is often merely a forerunner of a liquidation process, it still holds several benefits for the company and its employees. In addition, business rescue protects the company from creditors and it may help to ensure that the employees’ conditions of employment remain unchanged, unless it is renegotiated with the unions involved,” Du Plessis said.
He said Solidarity’s main priority was to protect its members’ jobs.
“We shall also present the principles of the Department of Labour’s retrenchment training scheme as a possibility to the business practitioner in order to protect jobs. In terms of that, employees with transferable skills will also be empowered until the mine hopefully can resume full production again,” Du Plessis said.
Business Report wrote last week that workers lived in fear that the mine would close soon as its financial resources were being depleted by rescue efforts.
Michael McChesney, the chief executive at Vantage, said last week that it was understandable that mine employees were concerned about their futures, given that the mine had been unable to produce for the past two months. “A number of initiatives are under way to rectify the financial position of the mine and secure its future.”
BUSINESS REPORT