Cash woes rattle Lily Mine
The future of Lily Mine hangs in the balance as it struggles to access funds to keep operations afloat or face the threat of bankruptcy.
|||Johannesburg - The future of Lily Mine, in Barberton, hangs in the balance as it struggles to access funds to keep operations afloat or face the threat of bankruptcy.
So far efforts to rescue three miners who have been trapped in an underground container for two months have been unsuccessful. About 900 jobs, including those of 300 contractors, are now on the line and businesses in the area will suffer if the mine does not turn around.
Read: Lily Mine pins hopes on business rescue
The junior mine owned by Australia’s Vantage Goldfields, which filed for business rescue earlier this month, finds itself in a difficult situation as the rescue mission weighs heavily on its balance sheet.
Efforts to find Solomon Nyerende‚ Pretty Nkambule and Yvonne Mnisi, who were trapped underground when a pillar collapsed, resulting in 20 000 tons of soil falling into a pit at the entrance of the mine, have so far failed as dangerous conditions have hampered rescue operations.
The company agreed to sink a decline shaft 500m from the original entrance.
The situation is so bleak that the offer by the company to donate R200 000 to each of Nkambule, Mnisi and Nyerende’s families has yet to be fulfilled, with the company saying yesterday that business rescue practitioners were dealing with the matter.
Solidarity general secretary Gideon du Plessis said yesterday that the company needed about R50 million to R250m for the development of the decline shaft and to start its operation.
“Access to funding is the major stumbling block. Mine management has approached various funders, but have not secured funding yet. There were talks with the Industrial Development Corporation for funding, but they failed to secure funding,” Du Plessis said.
Vantage Goldfields chief executive Mike McChesney and business practitioner Rob Devereux said they were assessing costs of the decline before approaching investors.
“Management and the practitioners are costing and evaluating the most efficient method of developing this shaft. This is of paramount importance to attract funding and suitors will be approached once this is complete,” they said.
They added that the plan for the decline shaft had been completed and would be reviewed by independent experts.
“Once the funding is in place development of the shaft will start immediately. The mine has a significant ore reserve which will last in excess of 10 years, which makes it an attractive investment,” they said.
Martin Madlala, the Department of Mineral Resources spokesman, said the obligation remained with the company to recover the container. “We continue to support them in their endeavours,” he said.
Du Plessis said regardless of the sustainability of the business, everyone was committed to finding the missing miners. “We have to be optimistic, but realistic. All efforts are to have everything finalised by the end of the year, so that the mine is operational in January.”
A mine employee, who spoke on condition of anonymity, said the mine would hold a mass meeting today for a briefing on the business rescue process, and a new chief executive was expected to be announced.
“It’s either they retrench or close the mine. They can sell anything to generate money. We will ask questions tomorrow,” he said.
He spoke of living in hardship since the disaster. “Life is on a downward spiral. We are struggling. The company said it will not be easy to recover a loss of over the past few months.”
The employee said a basic salary and housing allowance continued to be paid but no overtime or bonuses were paid.
BUSINESS REPORT