Hong Kong-listed Taung Gold International and Siyakhula Sonke Empowerment Corporation (SSC) have, as shareholders in a new company (Newco), made a conditional, binding offer to acquire the Lily and Barbrook mines, in Mpumalanga.

The offer, made to the business rescue practitioners (BRPs) of the mine’s owner, Vantage Goldfields South Africa, follows after a lengthy dispute between SSC and Vantage over an agreement for the sale of shares.

The Mpumalanga High Court last week ruled in favour of Vantage in its dispute with an SSC subsidiary, Flaming Silver, ruling that funding to reopen the mines had never been secured by Flaming Silver as alleged.

The mines went into business rescue shortly after the Lily mine collapsed in February 2016, killing three mineworkers who were trapped in a container underground.

SSC has, since early 2018, called for Vantage to hand over of the share certificates of the mines, claiming that Vantage had been delaying the sale process.

In March, Vantage cancelled the agreement for the sale of the assets with Flaming Silver, citing a lack of proof funds were available to reopen the mines.

SSC has said it would appeal the Mpumalanga High Court’s ruling.

Taung CEO Neil Herrick noted in a statement last week that the original business rescue plans had been declared to have failed, considering that some of these assets had been in business rescue for more than three years.

He said that, given the two mines’ troubled history and the ongoing litigation relating to them, he believed the Newco offer to the BRPs represented a viable alternative to deliver value for key stakeholders relatively quickly through the formulation and implementation of new business rescue plans.

Herrick explained that the key conditions of the offer related primarily to the completion of due diligence, the adoption of a new business rescue plan and securing all the necessary regulatory approvals.

Once new business rescue plans are adopted, Newco will disclose its cost consideration for the assets. Taung expected a new business rescue plan to be ready in six to eight weeks and said Newco would work with the BRPs towards achieving a positive outcome.

Taung will hold 51% of Newco, while SSC will hold 49%.

On the inclusion of SSC in Newco, Herrick stated that both companies were impressed by the assets and were convinced that there was potential to develop a business that was valuable and purposeful for its stakeholders.

“We recognise the respective qualities of each company’s management and we believe that the relationship is ideally suited to advance its respective and collective interests, given the history of the mines.”