- Vantage Goldfields January 3 report to creditors (0.17 MB)
- Arqomanzi January 5 report to creditors (0.17 MB)
South African miner Arqomanzi on January 5 held a briefing with other creditors of the Lily and Barbrook mines to demonstrate its proof of funding for resuming operations at the two mines.
Arqomanzi is seeking to assume the business rescue rights and take control to reopen the Lily and Barbrook gold mines. It, and former operator Vantage Goldfields, have both made business rescue proposals in an attempt to gain the business rescue rights for the mines.
Arqomanzi also took the opportunity to counter a report to creditors published by Vantage Goldfields on January 3.
However, Vantage Goldfields South Africa CEO Mike McChesney, in a January 6 statement, poured doubt over whether the majority of creditors attended Arqomanzi’s meeting, alleging that those attending the meeting “were almost all planted by Arqomanzi, including Herrick's co-perpetrators [Fred] Arendse and [Harry] Mazibuko, who dutifully read their scripts purporting to reflect the views of creditors”.
Arqomanzi, part-owned by diversified minerals operating and investment company Siyakhula Sonke Empowerment Corporation (SSC) Group, says the business rescue process is a creditor-driven process and that, going forward, business rescue rights should be decided by creditors.
Countering claims made by Vantage on January 3 that Arqomanzi does not have the funds to reopen the mines and conduct the rescue mission of the container that contains the bodies of Pretty Nkambule, Yvonne Mnisi and Solomon Nyirenda, Arqomanzi director Neil Herrick provided creditors with proof of funds in an HSBC account in Hong Kong.
In terms of its plans to reopen the mines, he said Arqomanzi has an independent competent person report, conducted by Minxcon, which contains its mine reopening plans.
Herrick further said Arqomanzi has proof of funds in the form of an investment promised by Wing Keung Wong (Meyrick Wong) of Mighty Strong Holdings Incorporated, which is controlled by Hong Kong-registered Alpha Capital Group Limited.
This funding is to the value of $27.55-million, which is more than the remaining investment amount of $24.72-million. Of this amount, R41.27-million had already been invested into Arqomanzi.
This funding is proofed by a sworn affidavit and annexures made in Hong Kong by Wong – copies of which Herrick showed during the January 5 briefing. He added that Wong is currently in the process of having the affidavit apostilled so that it can be applicable in a court of law in South Africa, in upcoming court cases.
“This is about us – the creditors . . . it is about the creditors having the final say,” said Herrick.
However, in response to Herrick’s call to “let the creditors decide”, McChesney says this statement is “misleading and deceptive” because although Arqomanzi claims to be the largest creditor of the companies in business rescue, other creditors will not have a say in its proposed business rescue process.
“Rather than the creditors being able to decide anything, Arqomanzi seeks to ram through its own invalid and unfunded proposal which is significantly less favourable to creditors, employees and other stakeholders than Vantage’s approved business rescue plans,” he says.
Arqomanzi has previously also alleged that Vantage’s proof of funding for its business rescue plan was fraudulent.
On December 30, 2020, Herrick said Mighty Strong entered into legally binding agreements through which it agreed to invest $27.55-million (about R430-million) to fund the completion of the business rescue. Arqomanzi intends to use this capital to reopen the Lily and Barbrook mines, as well as find the container in a rescue mission.
“Proof of funds was provided to us, and we then provided that to the business rescue practitioners (BRPs) on December 31  and the BRPs on [January 20, 2021] in a brief to creditors told creditors they received our proof of funding. They did not say they were not happy with it. For reasons unknown to us, the BRPs then sided with Vantage and then . . . attacked our proof of funding in court papers,” he said.
In addition to the Mighty Strong funding, Arqomanzi also has a funding package from the Industrial Development Corporation (IDC) to the value of R220-million that could be made available in month 27 after completion of the business rescue.
In a copy of the IDC funding application provided by Herrick during the January 5 briefing, the IDC acknowledges receipt of the Arqomanzi application, saying that although it falls within the IDC’s funding mandate, the letter did not “constitute a commitment by IDC, nor do the contents contain any representation or warranty of any kind on the part IDC”.
In addition, the IDC application receipt states that, in the process of the IDC considering the application, Arqomanzi would need to meet five criteria, including Arqomanzi’s offer to purchase to the BRPs being published in the form of restated and amended business rescue plans and fulfilment of conditions precedent thereto.
It also requests Arqomanzi accept the BRPs plans made by Barbrook and Mimco’s (the company that operated the Lily mine up until the time of the cave-in) creditors, table an acceptable debt/equity structure at peak funding and enable the IDC to conduct its own due diligence.
Lastly, the IDC’s consideration criteria requests approval by a special IDC credit committee and/or board investment committee.
In total, Arqomanzi claims to have R650-million in funding that it could use to bring the mines back into profitable operation and retrieve the bodies of the three miners.
“If we look at our cash for the first few years of the project, the funding from Mighty Strong is more than enough to settle all the creditors, start the redevelopment of the mines, start the rescue mission, bring Lily mine very close to production and then in the second year of the plan we need to additional funding from the IDC to complete the development,” said Herrick.
In Arqomanzi’s plans for Lily mine, it aims to buffer the new proposed mine from the area identified in the collapse of the crown pillar which occurred almost six years ago. “We have no intention of going back to try and produce anything in that area . . . we are going to launch the rescue mission [which is in that area] and look for the container and find the missing persons,” he said.
The rescue mission will involve the sinking of a rapid access decline shaft near where the initial collapse occurred which will be sunk to 5 Level, moving earth in an effort to locate the container and retrieve the bodies.
In conjunction with this, a new main production shaft – Rosie’s decline shaft, will be sunk to levels whereby the areas that were mined prior to the collapse can be reached.
“Vantage, as the owner and operator of the Lily and Barbrook mines, is committed to the business rescue of the Vantage companies and reopening of the mines,” says McChesney.
He adds that the Vantage companies in business rescue have approved business rescue plans. “Vantage has the necessary funding, expertise and experience to complete the business rescue of the mines, which will provide significant benefits to Vantage’s employees, creditors, suppliers, the local community and other stakeholders,” he concludes.