LONDON (Alliance News) - Strategic Natural Resources PLC Friday said that its subsidiary Elitheni Coal Ltd has ended arbitration proceedings with certain of its creditors, paying out ZAR5.4 million plus costs of ZAR600,000.
The natural resources development company said the payment was less than was being claimed by the creditors, and so Elitheni will be returned the balance of funds it previously deposited with the court in South Africa at the start of arbitration proceedings.
Strategic Natural, which indirectly owns 74% of Elitheni, announced in March that it had received notice from the London Commodity Brokers asking for it to be wound up amid disputes and claims which had led to two separate legal battles.
The company said today that it remains in discussions with London Commodity Brokers and its major creditors regarding amounts owed to LCB pursuant to an offtake agreement with Trasteel International SA, but that it expects the winding up petition will be heard by the Company's Court in London on May 12 unless some form of settlement can be made.
The petition claims USD1.15 million for what LCB claims are unpaid contractual agreements, alleged to have been put in place with Trasteel International SA 2011.
In April 2011, Strategic Natural Resources signed an exclusive coal off-take agreement with Trasteel, a steel supplier and commodity trader, for all the beneficiated coal to be mined from Strategic Natural's Elitheni coal mine in the Eastern Cape of South Africa up to an initial 2.0 million tonnes.
At that time, Strategic Natural had said the finalisation of the contract was the result of "many discussions with various parties introduced to SNR by their appointed coal brokers, London Commodity Brokers".
In addition, on Friday, Strategic Natural said it has now received notice from Thelo Rolling Stock Leasing Ltd that it has applied to the Arbitration Foundation of South Africa to instigate arbitration proceedings against Elitheni. The company said it is also in discussions with Thelo over settlement of the situation.
Also in March, the company said it was receiving pressure from Elitheni to complete recapitalisation plans for the company after Thelo Rolling Stock Leasing Ltd commenced legal proceedings to repossess containers that Elitheni currently rents from Thelo, due to failure to make payments.
At the time, Elitheni received notice of a court order by the High Court of South Africa which the company said effectively froze the company's entire interest in Elitheni and confirmed the jurisdiction of the Republic of South Africa to any further claims by Thelo Rolling Stock against Strategic Natural Resources or Elitheni.
In March, the company also said that it was in discussions with its lender Land Consultants Ltd, concerning the possible deferral of the repayment of its loans for a further six months and the possible conversion of interest due to Land Consultants into ordinary shares in Strategic Natural.
Strategic Natural has been in talks with a potential strategic investor to help with ongoing recapitalisation woes and said in March that it was evaluating a revised financing proposal involving the unnamed investor, and it was seeking proper evidence of funding from the investor which should allow of certain upcoming funds.
On Friday, the company said it remained in talks with the potential investor and hoped to soon be in a position to finalise and announce the terms of a fundraising through a share issuance.
Strategic Natural did note that there can be no guarantees that the discussions would result in a successful fundraising and again warned that if it cannot secure new funding soon its shares may be suspended.
Strategic Natural shares closed up 14% to 6.00 pence Friday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
Copyright 2014 Alliance News Limited. All Rights Reserved.