JOHANNESBURG (miningweekly.com) – Canadian gold producer and investment company AfroCan Resources Gold, which committed to investing $11.3-million in South African gold miner Vantage Goldfields, has breached the agreement and failed to remedy the breach, Vantage confirmed on Tuesday.

The company said the anticipated investment payments had not materialised, therefore Vantage and its mines had been placed under financial pressure.

“The breach is a setback for the Lily gold mine which remains in business rescue. The AfroCan funds were urgently required to commence the business rescue plan and to pay workers’ salaries,” stated Vantage.

Vantage Goldfields said it had concluded an unconditional subscription agreement with AfroCan on May 27, wherein AfroCan was contracted to make an investment of $11.3-million.

However, the company said that, despite various meetings since the breach, with AfroCan and corporate advisers Summit Private Equity and Capital Mineral Resources Investments, it appeared that AfroCan had “no intention” to comply with its legal commitments.

Therefore, Vantage said it had instructed its lawyers to claim specific performance from AfroCan, failing which AfroCan and its advisers would be “held to account”.

Nonetheless, Lily Mine’s business rescue practitioner Rob Devereaux has stressed that the business rescue plan for the mine would continue.

Devereaux told Mining Weekly Online that he would investigate the circumstances surrounding the nonmaterialisation of the transaction and would report any irregularity to the relevant authorities including but not limited to the South African Revenue Service, the Financial Services Board, South Africa’s Office for Serious Economic Offences and South Africa’s Directorate for Priority Crime Investigation, which is commonly known as the Hawks.

He also confirmed trade union Solidarity’s account that, two weeks ago, AfroCan CEO Brian Barrett had addressed Solidarity, the Association of Mineworkers and Construction Union and Lily mine’s leadership at Vantage’s Nelspruit head office to assure all concerned parties that everything was on track with the transaction.

However, Devereaux said that, subsequently, Barrett had come up with “a number of excuses” why the company had missed the June 30 deadline to pay Vantage $2.5-million as part of its agreed $11-million investment in the Lily gold mine.

“A letter of demand was sent by Vantage to AfroCan requesting that Barrett honour the agreement, at which point AfroCan withdrew the offer entirely,” Devereaux explained.