South African miner Arqomanzi, which is part-owned by diversified minerals operating and investment company Siyakhula Sonke Empowerment Corporation (SSC) Group, says it is considering its options to bring the drawn-out legal battle with Vantage Goldfields (VGL) and Vantage Goldfields South Africa (VGSA) to a “speedy conclusion”.

Judge President Francis Legodi recently handed down a judgment in a third application by Arqomanzi against VGL and VGSA, with numerous orders made.

Following the application, which was heard in September, Legodi ordered that the mining rights owned by Barbrook and Mimco are not capable of being exercised under the revised business rescue plans that were proposed in the Vantage business rescue proposal without the necessary consent of the Minister as contemplated in Section 11 of the Mineral and Petroleum Resources Development Act (MPRDA).

The court found that VGSA and the business rescue practitioners (BRPs) did not comply with the MPRDA and that no work may take place under Vantage’s revised business rescue proposal within the mining rights until consent has been obtained from the Mineral Resources and Energy Minister.

However, VGSA CEO Mike McChesney told Mining Weekly in response to questions on the matter that “the law is unclear in this regard” and that the company’s legal opinion “indicated that this was not required”.

Arqomanzi, however, says Vantage and the BRPs did not seek the consent of the Minister in respect of the November 2020 change in the controlling interest in the mining rights, as it believes Vantage “fears that the DMRE will not grant such consent” as a result of the Lily mine disaster.

Further, the judge also said the BRPs and Vantage are interdicted and restrained from misrepresenting to any person that the mining rights that are owned by Barbrook and Mimco are capable of being exercised under the business rescue plans that were proposed.

Additionally, the judgment stated that the subordination agreement concluded by VGSA and VGL in April 2015 subordinated only an amount of R14-million and that the balance of the loan claim (R375-million) remains unsubordinated in favour of Arqomanzi.

Another subordination agreement concluded by VGL and Barbrook in February 2013 for R17-million, with a balance of R172-million in the loan claim, also remains unsubordinated in favour of Arqomanzi.

Standard Bank lawfully and validly ceded VGL’s loan claim against Barbrook of not less than about R189-million, according to the judge.

Among the orders, the judgment stated that Arqomanzi is now to be considered an independent creditor of Barbrook for no less than R189-million, subject to the deduction of an amount of R17-million.

The BRPs were also directed to recognise Arqomanzi as a creditor of Barbrook and to allow it to participate as a creditor in the business rescue proceedings of Barbrook to the full extent provided for in Chapter 6 of the Companies Act.

Vantage has until 26 November to file an application for leave to appeal the judgment.

However, Arqomanzi CEO Neil Herrick says that, should the BRPs publish proposed amendments to the previously adopted business rescue plans and convene the meetings of creditors to consider and vote on such plans, “Arqomanzi will not vote in favour of any other amendments other than its own”.

Meanwhile, with reference to February’s turn of events where Arqomanzi questioned the validity of a letter from HSBC Bank in Hong Kong, Arqomanzi stated that the BRPs “did not conduct any basic checks on the forged letter, as they ought to have done”.

In spite of the alleged forged letter, the BRPs proceeded to implement Vantage’s instructions to them, which Arqomanzi said was “unlawful action” by the BRPs, and which was stopped dead in its tracks by the interim interdict and final order, which Vantage now seeks to appeal at the Supreme Court of Appeal (SCA).

Arqomanzi informed the BRPs of the forged letter in October, showed them HSBC’s written responses to Arqomanzi that it had not issued the letter and gave the BRPs the contact details of the responsible persons at HSBC.

Having reported to creditors on the matter on the following day, Arqomanzi noted that the BRPs had failed to respond to Arqomanzi and have also not given any feedback to creditors in respect of their investigation into the alleged forged letter.

“We believe Vantage committed an act of forgery, fraud and uttering of a forged document by using the forged HSBC letter to launch their unlawful proposal. We further believe that the BRPs ought to have uncovered the forgery as a part of their due diligence on Vantage’s funding but did not do so and that they therefore committed an act of uttering a forged document,” Herrick tells Mining Weekly.

Arqomanzi maintains its position that the aforesaid actions “constitute a fraud against the High Court and the creditors in that [the creditors] were effectively forced to go to court to protect [their] rights after the BRPs launched their ill-fated attempt on February 15 and using the forged HSBC Letter, causing a delay of at least another nine months”.

“We are not deterred by Vantage’s appeal to the SCA, which is simply another attempt to delay and frustrate matters,” Herrick adds.

Arqomanzi has also laid criminal complaints against VGSA and its directors with the South African Police Service (SAPS), in Nelspruit; Africa Pacific Capital, Macquarie Metals and VGL and their directors with the New South Wales Police, in Australia; and Africa Pacific Capital with the Hong Kong Police.

HSBC has agreed to cooperate with an investigation, Arqomanzi said.

McChesney declined to comment on the matter of criminal charges having been filed.

Diversified, operating, minerals and investment SSC representative Fred Arendse, meanwhile, reiterates that Arqomanzi has the funding in place and that it has detailed plans for reopening and redeveloping the mines, which include the retrieval of the container that hold the remains of three employees.

“[Arqomanzi] has spent over R11-million on its due diligence and a Competent Person’s report, which have been done signed off by a reputable, independent and internationally recognised technical firm Minxcon,” he elaborates.

Arendse says the company remains committed to the stakeholders, “which have been severely affected by these delays and is ready to implement its amended business rescue plan in the most expeditious manner”.

Arqomanzi is a bidder and creditor for the Lily and Barbrook mines in Barberton, which both remain under business rescue.

The mines have been in business rescue since 2016, after a collapse at the Lily mine resulted in the presumed deaths of still unaccounted for mineworkers Yvonne Mnisi, Pretty Nkambule and Solomon Nyirenda, who were working in a container at the time of the collapse.