Kabwe ~ Mon, 11 Oct 2021
THE Kabwe High Court has stopped Zamsort Limited and Handa Resources limited from transferring ownership of property rights over Kalaba mining belonging to Terra Metals limited to another investor.
This is according to an ex-parte order of interim injunction to prevent alienation of property and appointing receiver pending determination of the matter granted to Terra Metals limited shareholders Mumena Mushinge and Brian Chisala by Judge Kelvin Limbani.
“It is hereby ordered and directed that Zamsort limited and Handa Resources Limited whether by themselves, their servants or agents whomsoever be and are hereby restricted from disposing of or alienating or in any way encumbering the mineral tenants and assets known as Kalaba mine under the small scale mining license number 8224-HQ-SML and large scale exploration license number 19906-HQ-LEL until final determination of this matter or further order of the court,” judge Limbani said.
“It is further ordered and hereby directed that Mwenya Mukuka be and is hereby appointed receiver over the said mining tenements to manage and preserve until further order of this court.”
According to the Penal notice, if Zamsort limited and Handa Resources Limited whether by themselves, servants or agents elect to disobey the court order in any way whatsoever, they would be liable to contempt of court and imprisonment upon conviction.
In this matter, Terra Metals Limited and its shareholders have sued Zamsort Limited and Handa Resources limited demanding payment of US$5,889,407 in respect of their shares sold to another investor.
According to a statement of claim filed in the Kabwe High Court, the plaintiffs, Terra Metals Limited, Mushinge, and Chisala, who were shareholders, are demanding payment of $5,889,407 or in default of payment, full restitution of their 53 per cent ordinary fully paid shares in Zamsort Limited which were granted to new shareholders.
The plaintiffs stated that in 2015, Terra Metals had 4,950,000 shareholding in Zamsort Limited.
The plaintiffs stated that about the same period, Chisala had 500 shares in Terra Metals while Mushinge had 4,300 shares.
They stated that the defendant was at the material time holder of small-scale mining licence number 8248-HQ-SML and mineral prospecting licence 19906-HQ-LPL in respect of a mineral tenement commonly known as Kalaba Mine in North Western Province.
The plaintiffs stated that Kalaba Mine was still of good and bankable mineralisation and thus attractive and of interest to mining investors.
The plaintiffs stated that from 2014 to 2015, Zamsort limited encountered financial and operational challenges whereby its shareholders agreed and decided to raise capital by borrowing from the financial markets or by sale of their shares to intending and willing external investors.
“The plaintiffs in pursuit of the defendant’s agenda to raise capital aforesaid instructed its then chairman, Robert Penny, to identify and engage such corporations and persons as would be interested to invest into the defendant by way of outright purchase of shares therein/or provision of credit lines or loans. The said chairman in turn, inter alia, enlisted the services of one Fiona Penny to solicit for and draw such investment into the defendant company,” the statement of claim further read.
The plaintiffs added that in or about February 2015, an outside company called Ortac Resources Limited (ORL) was introduced to them as an intending potential investor into the defendant company.
The plaintiffs stated that by letter dated March 27, 2015 from ORL to Zamsort Limited and Terra Metals, an exclusivity agreement was entered into between the parties.
“Consequent to the said exclusivity agreement, the defendant and ORL on or about 30th March 2015 entered into and signed a Call Option Agreement whereby the defendant issued secured convertible loan notes in the aggregate amount of US $600,000 to ORL,” they stated.
The plaintiffs added that in the second Call Option Agreement, only $394,000 was advanced to the defendant.
“The plaintiffs avow that the convertible loan notes in essence were a percentage of their shares in Zamsort pledged as security in ORL, for repayment of the monies advanced to Zamsort,” they stated.
The plaintiffs added that it was a term and condition of the Call Option Agreements that upon ORL exercising its conversion option, the loan notes under the agreements were respectively going to convert into 10.7 per cent and 8.6 per cent of the fully paid ordinary shares in the defendant company.
They further stated that the conversion would denote ORL acquiring 19.34 per cent of the fully paid ordinary shares of the defendant, belonging to the plaintiffs.
The plaintiffs argue that the conversion for all intents and purposes were legally and effectively a sale of the said shares by them to ORL for the consideration of $900,000.
They further explained that because of the much-needed recapitalisation of the defendant company, and pursuant to the exclusivity agreements, the purchase consideration for their shares was not paid to them but was invested into Zamsort.
“At the time, it was agreed that the said purchase consideration in due course was to be repaid to the plaintiffs as owners of the shares that were sold and transferred to ORL, by way of convertible loan notes,” the claim further read.
And the plaintiff stated that a second investor, Kopara Investments Limited, was identified and introduced to the shareholders and directors of Zamsort for purposes of buying equity or shares in the defendant company.
The plaintiffs stated that Kopara by its associated entities and persons, Bay Bridge Trading, Supa Properties, AV Marketing and Distributors and Patel Arunbbai between June 21, 2015 and October 11, 2016, made various investment payments into the operations and other purposes of the defendant company all aggregating to the total of $4,320,000.00.
It was stated that a third investor came on board with $575,407 and by reason of the sale of shares by the plaintiffs, a total of $5,889,407.00 was directly paid to the defendant or invested towards its various purposes and none of that money was paid to the plaintiffs as the owners of the shares that were sold or diluted.
The plaintiffs stated that it was discussed and agreed with Penny that Zamsort would pay the plaintiffs all the money received from the investors that was invested in the defendant company.
They added that they started demanding payment in 2018 but the defendant had failed to pay them.
The plaintiffs stated that Zamsort and its new shareholders have unjustly been enriched.
Mushinge and Chisala are also demanding payment of interest on the monies, interlocutory orders for preservation of the defendants’ mineral tenements, costs and any other relief the court might deem fit.
There is a dispute, subject to arbitration, between Zambia Mineral Exchange Corporation, Terra Metals, Mumena Mushinge and Brian Chisala and Zamsort Limited, Handa Resources and Affrimin Resources emanating from a lease Agreement entered into on August 4, 2020 in which Zamsort leased to the Zamex a processing plant, all plant, mining equipment and machinery at its Kalaba mine in Mwinilunga under small scale license No. 8248-HQ-SML and small scale exploration license No. 23243-HQ-SEL.
Terra Metals, Mushinge and Chisala have further taken Zamsort, Handa and Affrimin to task over the default of the 1st Defendant to pay US$5,889,407.00 for shares sold or relinquished to Handa Resources.
Handa, a very new company, was incorporated on 4th November 2020 and has as shareholders and directors individuals such as former ZAF commander General Sunday Kayumba and entities such as Arc Minerals and Kopara Investments whose legal owner for both companies is Nicholas Von Schirnding.
It is reported that Zamsort, in collusion conspired to deny Zamex and others the benefit after they divested ownership of their mining tenements over Licenses No. 8248-HQ-SEL, 23213-HQ-SEL and 19906-HQ-LPL.
In 2014, Zamsort obtained a Large Scale Exploration License No.1990 covering approximately 100, 000 hectares and as required by law, after four years of the License, it had to surrender 50 per cent of that 100,000 hectares and exploration thereof.
In 2018, Zamsort legally surrendered 50 per cent of the 100,000 hectares which tenement was subsequently acquired by ZACO Ltd, a company owned by Super Properties Ltd and UNICO Properties Ltd, and has as its directors Mr. Nicholas Von Schirnding again and Rajendra Patel.
ZAMSORT Ltd also obtained a Small Scale Mining License No. 8248-HQ-SML and another Small Scale Exploration License No. 23243- HQ- SEL in the remnant portion of the area held under license No. 19906-HQ-LPL.
And in 2020, ZAMSORT was required by law to surrender back 50 per cent of the remaining lot of License No. 19906-HQ-LPL and upon surrender, AFRIMIN lodged an application and subsequently acquired License No. 28700-HQ-LEL being the remaining portion.
This was done despite a pending application by Central African Resources (CARE) Limited.
In 2021, ZAMSORT then owning a quarter of the Land previously covered by license No. 19906-HQ-LPL, abandoned Licenses No. 8248-HQ-SML and 23443-HQ-SEL which resulted in them being part of the remaining portion of No. 19906-HQ-LPL.
ZAMSORT then caused a change of particulars with respect to No. 19906-HQ-LPL for it to be registered as owned by the 2nd Defendant (HANDA Resources LTD).
The abandonment of Licenses No. 8248-HQ-SML should have resulted in it being offered to Cupriferous Resources Ltd, a company that had an application pending on the said abandoned License.
The result of this is that the 100,000 hectares of land previously covered by No. 19906-HQ-LPL is owned 50 per cent by ZACO while AFRIMIN owns 25 per cent and the remaining 25 per cent is owned by Handa, actions which are deemed illegal and irregular as ZACO’s application for the 50 per cent portion surrendered by ZAMSORT should have been subjected to the pecking order basis by which applications were considered at the time of lodging.
All this was done with full knowledge of some identified Ministry of Mines staff in the previous administration who did not make any efforts to correct the situation.
Additionally, Von Schirnding and Patel are the controlling owners of ZACO and ZAMSORT LTD and even though on paper there was a surrender, the beneficiaries remain the same, sources reveal.
Further, AFRIMIN’s application for the surrendered portion by ZAMSORT in 2020 should have been subjected to the pecking order system but was not as there was an application by Cupriferous placed ahead by AFRIMIN.
Sources close to the transaction say this action allowed the transfer of property without Fiscal Compliance and Regulatory Consent.
“The whole purpose of this illegal and unprocedural maneuver was to divest ZAMSORT LTD of its economic value so that it is incapable of meeting its obligations to the people owed for the shares divested in the company or to satisfy its judgment debts,” said a source.