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There was no obligation to pay any amount in respect of that purchase, and in the circumstance the amount is recoverable on the basis of unjust enrichment. – SCA judge, Phillip Coppin

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Sizwe sama Yende

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The Supreme Court of Appeal (SCA) has ordered Australian company, Vantage Goldfields, to reimburse R1million with interest to a bidder of its Mpumalanga mines.

This is one of a plethora of legal tussles in the business rescue process of sister mines - Lily and Barbrook – situated Louisville near Barberton, over nine years. 

Vantage Goldfields has lost every court challenge so far, but it has been hellbent in preventing the sale to Siyakhula Sonke Empowerment Corporation (SSC). This hardline and intransigent attitude has prompted the SSC Group, which is one of Vantage Goldfields biggest creditors, to apply for liquidation.

Vantage Goldfields lodged an appeal to the SCA to overturn a Mpumalanga High Court order that declared a sale of shares agreement between Vantage Goldfields SA (Pty) Ltd and SSC’s subsidiary, Flaming Silver Trading 373 (Pty) Ltd, void and of no force because certain conditions of the agreement were not fulfilled.

SSC put an offer to buy shares in Vantage Goldfields’ two subsidiaries for R310 million, which would enable Flaming Silver to take ownership of the two gold mines. The sale agreement was signed on November 1 2017. 

Vantage Goldfields took a decision to put the two mines under business rescue following the collapse of a crown pillar of the bigger sister mine, Lily, on February 5 2016.

VANTAGE GOLDFIELD’S ABOUT-TURN

Due to this accident, three workers – Pretty Nkambule, Solomon Nyarenda and Yvonne Mnisi - were buried under the rubble when a container office they were working in plunged about 60 metres down when a sinkhole opened at the entrance to Lily Mine. Their bodies have still not been retrieved.

Vantage Goldfields put the mines under business rescue as it could no longer afford to re-open them and operate. However, Vantage has lately done an about-turn and claimed it has the funds to re-open the mines and Mineral Resources and Energy minister, Gwede Mantashe, has granted the company consent amid an outcry that the proof of funds had not been produced to the business recue practitioner, Rob Devereux.

Mantashe’s decision comes at the backdrop of Vantage Goldfields poor safety record and adverse findings against it by a DMRE inquiry following the tragic accident in 2016.

The re-opening, as announced by Mantashe in May 2024, was due early last year but has been postponed three times already. 

More than 1000 workers lost their jobs when the mines were shut down in 2016.

A new owner or investor would have to retrieve the bodies of the three workers before commencing business – a task that SSC has been committed to do.

However, Vantage Goldfields has worked hard to frustrate SSC’s and its partners’ offers over the past nine years and consequently sparked a convoluted litigation process that has prolonged the finalisation of the company’s rescue from distress.

UNJUST ENRICHMENT

SCA acting judge Phillip Coppin said in his judgement that whatever Vantage Goldfields argument could be, the whole of the agreement would have come to an end and be of no force when the DMRE’s consent was not obtained on October 31 2018.

“Since that agreement had lapsed, there was no obligation on Goldfields to sell the shares and claims to Flaming Silver or SSC, and no reciprocal obligation on them to purchase the same. There was no obligation to pay any amount in respect of that purchase, and in the circumstance the amount is recoverable on the basis of unjust enrichment,” Coppin said.

The principal agreement between Vantage Goldfields and Flaming Silver stipulated that the agreement would be of no force and effect unless the fulfilment period was extended in writing before deadline.

Various deadlines passed after the parties had concluded addenda to the agreement that changed the dates for financing and obtaining consent for the transaction from the Department of Mineral Resources.

SSC and Flaming Silver went to the Mpumalanga High Court in 2017 to get an order declaring that the principal agreement had lapsed and that monies that Flaming Silver paid under the agreement be paid back as Vantage Goldfields was unjustly enriched.

The court issued a judgement in favour of SSC and Flaming Silver on October 19 2022, and ordered Vantage to pay R1 million plus interest. Vantage exercised its right to appeal and eventually failed in the SCA on January 9 this year. The SCA dismissed Vantage’s appeal with costs.

LIQUIDATION

SSC has, meanwhile, informed Devereux and creditors that it has launched a liquidation application last December following failed attempts to engage constructively with Devereux and lack of funding by Vantage to re-open the mines. 

Devereux was, according to SSC, evasive and adopted an avoidance stance altogether. He stands accused of refusing to obey a Mpumalanga High Court judgement to draft amended business rescue plans with verifiable proof of funds from SSC and its partners.

Devereux did not respond to written questions.

“Vantage management and their [business rescue practitioner] have the opportunity to prevent the liquidation by providing credible and verifiable proof of funds, easily accessible in South Africa, to publish amended business rescue plans, arrange a creditors meeting to vote on the amended plans and pay creditors accordingly,” reads SSC’s correspondence to creditors and affected parties.

SSC now believes that there are no reasonable prospects to rescue the mines. “This is not a decision we took lightly, but only after lengthy attempts to engage constructively with the BRP.”

Devereux and Vantage have filed a notice on January 10 to oppose SSC’s application but have failed to submit their replying affidavit on January 31 2025.