To All: Friday morning I spoke with Frank Van Den Waters, SUF's Chief Financial Officer. He was very courteous and certainly appeared to me to be open and forthcoming in his comments to me. Let me paraphrase what he told me.
SUF has been in negotiations with the heirs and DeBeers (principally DeBeers) for the past three weeks. The demands made by DeBeers were "so outrageous" that SUF might not have survived if they had agreed to such a settlement.
SUF decided to become "proactive" and withdrew their court action so that they could apply to the Minister of Mines for a Section 24 expropriation. If the Minister refuses to invoke Section 24, then SUF will return to court and fight for the rights in a long legal battle (possibly 2-3 years). If the Minister invokes Sec 24 in SUF's favor, then SUF will have to work with the heirs to determine (1) if the heirs in fact have legal ownership of the rights, and (2) if they do, what the valuation should actually be. Frank made it clear that SUF believes this apparent legal detour will in fact quickly resolve the issue of mining the property, leaving the valuation issue(s) to be worked out later. Frank said resolution on the Sec 24 expropriation should occur in weeks rather than months. SUF loses nothing but a little time by trying this and could take the brass ring in short order if it works.
Now for some comments of my own.
The interesting thing about this switch to using Section 24 is that the deal between NGS and DeBeers clearly establishes a *maximum* price as compensation to the heirs, if they are indeed found to be the rightful owners of the mineral rights. This means that the issue of valuation is now divorced from the issue of which group should get to mine Marsfontein, so the Minister need only consider which group is the better group in light of the country's needs. Since the country's needs are for mining jobs, foreign currency and a mining environment that earns the respect of companies and countries around the world, it seems to me that the outcome will probably be a finding for SUF and Randgold. However, DeBeers does have a lot of clout and money. We will see what kind of stuff the Minister of Mines and his staff are truly made of, methinks.
If the Minister finds for SUF, SUF should be able to begin mining immediately. It does not *appear* that NGS would have any legal standing to sue in court to halt the expropriation or the mining. Their only recourse is to fight over compensation. However, I am not a legal eagle nor familiar with the ins and outs of South Africa's legal system.
As for compensation, it would seem to me that SUF, although obviously willing to pay the $15M that NGS agreed to accept from DeBeers, will fight or arbitrate for a much lower amount or none at all. Remember, the Minister need not concern himself with this issue. It can be left for court fight, direct settlement or arbitration. There is no assurance that NGS will ever get anything. My guess is that, if the Minister invokes Sec 24 in SUF's favor, NGS will be forced to accept a much smaller amount in settlement than the known maximum of $15M.
If the Minister does find for SUF and Randgold, DeBeers will end up with nothing.
Any comments, anyone?
Steve |
