HomeBusinessMetallon's $108b trial adjourns

Metallon’s $108b trial adjourns

TRIAL in Zimbabwe’s biggest-ever damages claim adjourned at the High Court last week, with representatives of South Africa’s Metallon Gold and claimant Stanmarker Mining (Pvt) Ltd travelling to England this week for an evidenc

e-in-commission (EIC) hearing.

Stanmarker, owned by marketing and tourism entrepreneur Lloyd Hove, is suing the trans-Limpopo company for US$12 million (about $108 billion) for being denied 40% in equity due to indigenous groups under prescribed foreign-investment rules.

The centre of the dispute is Metallon’s distribution of the stake to Manyame Consortium, although the Mzi Khumalo-owned company feels the interrogation of former Lonmin plc finance director John Robinson could help fend-off Stanmarker’s entitlement claim.

Khumalo gained control of the former Independence Gold Mining group after concluding a fire-sale US$15,5 million deal with Lonmin and it is thought Robinson’s knowledge of Stanmarker, and Metallon’s cooperation — running up to the mines buy-out — could help determine the course of the court action.

The Briton, along other representatives of Lonmin, is scheduled to testify before the United Kingdom EIC gathering.

Trial judge Yunus Omerjee notified his Westminster counterparts mid last week as well as Lonmin’s solicitors and Robinson’s on the constitution and beginning of the London process, pencilled for June 13 and 14.

The parties, mainly the defence, will peruse relevant Lonmin documentation, and check correlative information.

It (EIC process) is going ahead against the background of procedural glitches, confusion and doubt, but that the Zimbabwean authorities have sanctioned its go-ahead means the complexities have been cleared.

In Harare last week, Metallon’s lawyers opened their account by cross-examining principal Stanmarker owner and director Hove, and MBCA Bank Ltd corporate finance guru Chris Mazarire.

Mazarire did financial assessments of the group prior and after the breakdown of Metallon and Stanmarker’s relationship. His findings also form the basis of the latter’s claim amount.

Although Mazarire’s conclusion was US$29 million, Stanmarker settled for US$12 million.

More importantly, the parties agreed on a valuation of US$18 million and the next step is to determine whether there was a breach.

Robinson’s testimony and the EIC process also hold key to the outcome of the judgement, legal experts said.

During trial last week, the defence team — led by high-profile South African senior counsel Cedric Pukrin — dwelt on the importance of instituting the UK action and cross-examining Robinson.

According to sources, Pukrin was on a R24 000 fee a day (about $31,2 million).

On Thursday last week, the defence also quizzed mining consultant Cuthbert Musingwini, who carried a due diligence on the five-mine gold group on Stanmarker’s behalf and prior to Khumalo’s bargain acquisition of the group.

The Durban-based resources tycoon completed the purchase through Pemberton International Investments.

The defence dwelt on Mazarire’s financial projections and analysis, aiming to downplay Metallon’s profitability and valuation.

An aggressive Pukrin tested the MBCA executive’s grasp of punitive costs afflicting Zimbabwean mining industry, particularly Metallon and how those expenses had made hard work of operating a business in the country.

The move, legal observers said, was aimed at scorching Stanmarker’s claim amount — a trickle in overall valuation of the group.

The defence’s effort also comes as Metallon executive Greg Hunter said last month that the company would be worth R1,87 billion (about US$312 million) on listing.

He also pronounced in February that yearly gold output would be 600 000 ounces by 2010 and the company held 3,3 million ounces of gold in reserves, of which 2,7 million lie in Zimbabwean ore beds. — Staff Writer.

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