Mvela could faces up to R5 billion claim from Khumama
September 18, 2009
A spat between Mvelaphanda Resources and black economic empowerment group Khumama Platinum has turned nasty.
Khumama Platinum, which started out holding the mining rights in respect of the Johannesburg and Sheeprun farms on the eastern limb of the Bushveld Complex, is now mulling a R3 billion to R5 billion claim against Mvela Resources.
This week's Financial Mail reports that Khumama Platinum shareholders won an arbitration ruling on September 3 that could open the way for the up to R5 billion claim.
Citing a Khumama shareholder, the article said the group was considering what recourse to follow after the ruling that, in his interpretation, nullifies Mvela's purchase of Khumama's stake in the Booysendal project.
Taking a step back, Khumama Platinum and Anglo Platinum agreed in principle to establish a 50:50 joint venture to develop the Booysendal platinum project on the eastern limb of the Bushveld Complex in July 2003.
Khumama Platinum was acquired by Mvela Resources in February 2004 and subsequently consolidated into Northam Platinum .
Mvela Resources purchased Khumama Platinum for 9.275 million fully paid shares in Mvela Resources, R80 million in cash and a possible upside payment to be determined in accordance with a contractual formula.
According to Mvela Resources, Khumama Platinum's sole assets were R100 in cash and "the non-binding expectation" that it might be able to negotiate a 50:50 participating joint venture with Anglo Platinum in respect of the Booysendal Project, on the basis of a life-of-mine concentrate off-take agreement.
Back to the present dispute, which centres on the sale agreement between Anglo Platinum, Mvela and Khumama that was reached in 2004.
The Financial Mail explained that the agreement stated that Angloplat was to conduct a bankable feasibility study (BFS) on Booysendal, and Khumama would receive 50 percent of whatever amount over R600 million its 50 percent share the project was valued at.
But Mvela Resources said the agreement stated that in the event that one half of the real net present value, discounted at 12.5 percent per annum (real) attributable to the joint venture, exceeds R600 million, then the former Khumama Platinum shareholders are entitled to one half of the excess.
Because Angloplat sold its 50 percent stake in Booysendal in a three-way deal with Northam Platinum and Mvela, it never completed the BFS.
The arbitrator therefore ruled that "an award is made... declaring that the agreement is void", said the Financial Mail.
But Mvela Resources is arguing that the "transaction cannot be unwound".
It said in a statement that since it announced the acquisition of Angloplat's interest in Booysendal and the transfer of Booysendal to Northam Platinum in September 2007, Mvela Resources had "consistently undertaken to ensure that the provisions of Clause 19 of the 2004 Agreement are honoured" despite the withdrawal of Angloplat.
"Notwithstanding this, the former shareholders of Khumama Platinum initiated arbitration proceedings under the 2004 agreement," Mvela Resources said.
Mvela Resources said it had also offered to have the Final Feasibility Study - currently being completed by Northam Platinum, reviewed by an independent expert, who also would calculate the upside (if any) due under the 2004 agreement.
But it said this offer was rejected by the former shareholders of Khumama Platinum and the parties agreed that it was no longer possible to enforce the clause of the 2004 agreement.
"As a result of this ruling, the consortium now bears the onus of proving the extent (if any) to which Mvela Resources has been enriched by the transaction."
In practise this requires that the amount (if any) which may be due under Clause 19 be calculated by reference to the Final Feasibility Study and the other valuation terms as set out in Clause 19," said Mvela Resources.
|
|
