Gecamines II22 Jul 2023 13:14
Since some people obviously don't understand what they are talking about:
The "VUP" partnership was RRR, VUP and 1620 Capital. RRR had 50.1%, it was originally lower when they were looking at the tailings deals but it was renegotiated.
RRR's role was to be the operator, procure a BFS and bring the assets into production.
RRR was taking steps to put a JORC report together when suddenly access to the Gecamines core shed was prevented. RRR needed access to the cores drilled at Musonoi to procure a JORC, consequently progress was stopped.
RRR couldn't get a straight answer to what was going on until it was made aware that a court case had been brought in the Commercial Court in Lumbumbashi. In that case, VUP was suing Glencore and Gecamines jointly for $15mil being the amount outstanding on a contract to surrender the Musonoi + 2 licences to Gecamines: $5mil had already been paid to VUP out of the $20mil consideration.
RRR intervened and asserted that the assets concerned were not owned by VUP but by the partnership. RRR won the case, established that they were partnership assets not VUP assets and was awarded $2.5m (being 50% of $5mil) plus damages of $2mil. VUP made no appeal against the $2.5mil award but did appeal the damages award and lost.
Upshot: RRR established the assets were partnership assets and that it owned 50.1%. That cannot be appealed. Because of the dispute, Gecamines has indicated it will pay the $15mil to whoever it is instructed to by the courts. The Presidential Arbitration Court is the relevant court.
So there is no issue about Gecamines paying the $15mil, it merely wants to be instructed who to pay it to and in what proportion.
Suing Gecamines: Gecamines is the largest DRC para-statal. Suing Gecamines is regarded as an attack on DRC; VUP made a big mistake in suing Gecamines. RRR has not and will not make the same mistake.
So why, if Gecamines has the $15mil, did VUP jointly sue Gecamines and Glencore? Supposedly, VUP surrendered the licences for $20mil and then in an unconnected manner Gecamines sold the licences on to Glencore the same day for $420mil. This type of deal is called a back to back arrangement: VUP knew the assets were being sold on and who to, otherwise why sue them jointly for the $15mil unpaid consideration? Gecamines was acting as a cut out. The sale deal was really between VUP and Glencore. Inducing someone to break a commercial contract is called Tortious Interference: the cut out was to disguise this.
All of this happened under the previous Gecamines management. There is now new management who intend to clean house.
I have no doubts that Glencore is next on the agenda but that is only my opinion.
DYOR
Sign In
Follow the stocks
