Mining News

Blyvooruitzicht Gold Mine: Ray of hope

Written by  Charlotte Mathews, Financial Mail Saturday, 25 June 2016 20:20
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In 2010, workers at DRDGold’s Blyvooruitzicht gold mine near Carletonville toyi-toyi -ed to protest against a bid for the distressed mine by Aurora Empowerment Systems, whose reputation was already marred by events at Grootvlei and Orkney.  Blyvoor traded itself out of its difficulties then, but only three years later, Village Main Reef, which was managing the mine pending the completion of a deal to buy it from DRDGold, put the mine into provisional liquidation.

 

Blyvoor workers are now little better off than their Aurora counterparts. They are still waiting to receive their full retrenchment payments and those who have not found other jobs are still living in the old mine village, where the continuation of water and electricity services is uncertain. Illegal miners have pillaged the site. Crime and environmental damage are a major concern for all those living in the vicinity.

But there is a ray of hope. A new company, Randlord Capital, has bought the slimes dams, processing plant and No 5 shaft for an undisclosed sum and hopes in time to restart limited underground mining. This does not mean a full restoration of Blyvoor mine, but if Randlord is successful, it will create several hundred jobs.

One of the joint provisional liquidators, Leigh Roering of Harvard Corporate Recovery Services, says the provisional liquidation order has been extended to November 25 and no financial report will be available until after final liquidation. Some interim dividends have been paid to employees.

The liquidators had an agreement to sell the houses on the mine to a property developer, but the sale was cancelled and there is no other purchaser at present. The electricity to residents has not been cut off, as the liquidators have made payments to Eskom. Lawyers for Human Rights is assisting residents on electricity and water-related issues. Roering says a long-term solution is needed as the liquidators cannot assist the villagers indefinitely.

Randlord Capital plans to invest about R170m to restart gold extraction activities. Once the surface operations are generating cash, it plans to restart underground mining.

Randlord’s team is relatively young and does not have extensive mining expertise. It includes Karel Potgieter, who was previously financial manager at Blyvoor; Bastiat and Dane Viljoen; and Richard Floyd. Potgieter and the Viljoen brothers, together with well-known mining entrepreneur Peter Skeat, are the investors.

Potgieter says though Randlord has a young management team that believes in the fundamentals for a long-term rising gold price, they are taking a conservative financial approach, particularly as they are investing their own savings in Blyvoor.

They believe they can succeed because Randlord is being advised by various people in the gold industry with many years of experience, including Skeat; it is starting operations at Blyvoor without some of the issues that hampered previous operators; and with a small entrepreneurial team Randlord has a lower cost structure than previous owners. The new owners intend to run Blyvoor as two separate cost centres, surface and underground, with no cross-subsidisation of unprofitable activities.

Bastiat Viljoen says the new owners do not want to raise unrealistic expectations by promising a certain number of jobs. Tailings mining is not very labour-intensive in itself but creates other opportunities, while underground mining would require several hundred employees.

Mariette Liefferink, CEO of the Federation for a Sustainable Environment (FSE), which has worked for years to combat the negative after-effects of gold mining on the West Rand, says the federation has laid criminal charges against the former directors of Blyvoor mine for environmental damage resulting from the failure to rehabilitate the slimes dams. They are waiting for the National Prosecuting Authority to proceed.

She says the federation has been supported in its efforts by the department of environmental affairs, which is very encouraging. It is vital to stop the practice of mining companies putting themselves into liquidation when they stop making a profit, which then absolves them of any environmental liabilities. Liefferink says though there is about R44m in the Blyvoor rehabilitation fund, the department of mineral resources is refusing to release it.

Separately, a local businessman, Paulo de Gouveia, confirms he is drawing up legal papers to address the dust pollution from Slimes Dam No 6, which is toxic and is affecting residents of Blyvoor, Elandskraal and Deelkraal villages. He is opposed to the new owners of the Blyvoor dumps putting more wet material onto the dam. He wants the entire dam removed.

Liefferink says the Federation has received a donation from a Belgian doctoral student which will help to fund research into whether Randlord’s plans for Dam No 6 will be a sustainable solution.

 

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