MARSFONTEIN: ENOUGH IS ENOUGH
Since the beginning of the Marsfontein saga, the heirs have refrained from fighting this matter in the press. They sincerely believed that SouthernEra would treat them in a fair and just manner. This was a huge mistake. In view of the distorted picture painted by SouthernEra, they would like to set the record straight.
A. EFFORTS BY THE HEIRS TO NEGOTIATE WITH SOUTHERNERA
1. The heirs became aware of the mineral rights during the first week of December 1997, when they received an offer to purchase from a company represented by Richard Bluett. At that stage they were not aware of the application for expropriation of the mineral rights in terms of section 17 of the Minerals Act ("the expropriation application") lodged by Randgold.
2. On 12 December 1997, they got word of the expropriation application. The Department of Minerals and Energy ("DME") in Johannesburg and Pietersburg were contacted immediately and although the DME Pietersburg undertook to notify the Director of DME in Pretoria that the heirs were available, willing and able to negotiate with any prospective purchaser, this message was not relayed timeously.
3. On 15 December 1997 the lawyer acting for the heirs, visited the Director General of the DME in Pretoria. After considering the presentation by the lawyer acting for the heirs, he decided not to proceed with the expropriation, at that stage. The heirs were asked whether they would negotiate with Randgold, and duly agreed to do so.
4. Thereafter a letter dated 22 December 1997 was sent to Randgold in an effort to initiate the negotiating process. They declined our invitation.
5. The heirs subsequently found out that SouthernEra was involved in the project and arranged a meeting with Dr Jennings on 8 January 1998. The meeting took place at the offices of Hilton Ashton of SMK.
6. After informing our lawyer that "the heirs were like worms creeping out of the woodwork" the meeting continued.
7. No information was withheld from Dr Jennings at the meeting. He was told about the procedures under consideration in respect of the transfer of the Mineral Rights, as well as the offer the heirs had received in the amount of R 42 million. Dr Jennings asked when registration was expected, and it was intimated to him that the heirs were busy with the process of reopening the estates and other standard preliminary actions which would result in registration by March / April 1998. The heirs confirmed that they would consider any offer from SouthernEra and that they would do anything necessary to assist them.
7. After the meeting, the heirs were under the impression that the matter would be settled with SouthernEra. In a subsequent telephone call, Dr Jennings stated that SouthernEra would rather take its chances with Randgold and the expropriation application. The heirs were stunned.
8. On 30 December 1997 a further letter was addressed to Randgold's lawyers, again inviting them to negotiate. To date no reply has been received.
9. The heirs had frequent discussions with the DME Pretoria. It became apparent that a meeting scheduled to take place between the heirs' lawyers, the DME and Randgold in an effort to reach an amicable solution, had unilaterally been changed to a final meeting where the heirs had to state their case as to why they should not be expropriated.
10. At that stage, no documents were made available to the heirs, notwithstanding various requests to the DME to provide them with same. Despite being obliged under the Constitution to make all information available, the heirs were forced to obtain a Court order against the DME to gain access to information.
11. The heirs had no other option but to approach the Court for an interdict preventing expropriation.
12. Needless to say, it became quite clear that neither SouthernEra nor Randgold were interested in any negotiations with the heirs, notwithstanding numerous efforts by the heirs before and after the Court application. SouthernEra's attitude was that it is not legally possible to deal with heirs. (However, it is quite clear from other documents that SouthernEra did not adhere to this point of view in the case of other farms in the Klipspringer Project).
13. After registration of the mineral rights in the name of the realisation company ("NGS") formed by the heirs, NGS again invited SouthernEra (letters dated from 12 March 1998 to 19 March 1998) to make a reasonable market related offer, as other parties had expressed interest in purchasing the mineral rights from NGS.
14. It was made clear to all interested parties that NGS was eager to sell the mineral rights to a party willing and able to mine the deposit.
15. A meeting was held between Randgold, SouthernEra and the lawyer representing the heirs in negotiations. After being threatened that Randgold and SouthernEra will see to it that NGS is locked up in a court battle for the next 5 years, and that nobody else would mine the deposit, Randgold made an offer to purchase the mineral rights. This offer was however not acceptable to NGS. NGS again invited Randgold and SouthernEra to consider their position and to provide NGS with an offer (if any) before a specified date.
16. Further correspondence followed and in each instance a distorted reply was received.
17. Hilton Ashton of SMK phoned and asked whether NGS would be willing to meet with Dr Jennings. When the call was returned, Dr Jennings had just informed Hilton Ashton that he was no longer interested in the meeting.
18. Dr Jennings arranged a meeting with the heirs' lawyer and Mr Asworth (Randgold) and was adamant that their lawyers should not be present. Those present at the meeting were brought up to date on the offers NGS had received and expected to receive. The procedure which NGS would adopt in order to decide which offer to accept was also explained to them at the meeting. (All offers would be put forward at a shareholders' meeting, and the shareholders would then decide which offer they wished to accept). Once again NGS invited SouthernEra and Randgold to make an offer, which would be considered by the shareholders of NGS along with the other offers that were received. It was confirmed that the price range of the offers NGS had received, and expected to receive, was between R 50 million and R 100 million.
19. However, on the same day on which the meeting took place, the application for expropriation in terms of Section 24 was served on NGS. On SouthernEra's own version, the mineral rights are worth far more than R 980 000,00. Notwithstanding this, and the fact that they were aware of the other offers, they once again offered R 980 000,00 "as reasonable and fair" compensation for the expropriation of the mineral rights.
20. It was made clear to SouthernEra and Randgold that NGS intended to comply with the objective of the Minerals Act, namely optimal utilisation of minerals, by selling the Mineral Rights to a willing and able buyer who was committed to mining the deposit within 12 months. SouthernEra and Randgold refused to make any written offer to purchase the mineral rights. Instead SouthernEra and Randgold chose to apply for an interdict restraining NGS to deal with the mineral rights.
21. A meeting was held at the offices of SouthernEra's lawyers on 9 April 1998, in an attempt to obtain an offer from SouthernEra to put to the shareholders of NGS. A peculiar stance was adopted by SouthernEra. They demanded that the heirs' lawyer agree in principle to settle the matter there and then, effectively denying the shareholders the opportunity to discuss the settlement offer, along with the other offers to purchase the mineral rights, properly.
B. BACKGROUND: RANDGOLD AND SOUTHERNERA
1. In 1995 Randgold applied to the Minister in terms of section 17 for a consent to prospect and a prospecting permit. They did not bother to find the heirs. No mention was made of SouthernEra or a Joint Venture.
2. Under South African law, a prospecting permit is not transferable (i.e from Randgold to SouthernEra). Similarly, prospecting without a prospecting permit, is a criminal offence.
3. The prospecting permit granted to Randgold was only valid for one year. Randgold thus had to apply for a further prospecting permit in 1996. Again, no mention was made of SouthernEra or a Joint Venture.
4. On Randgold's own version, they never conducted any prospecting activities on Marsfontein. Instead SouthernEra did so, notwithstanding the fact that the consent to prospect and the prospecting permit were issued to Randgold.
5. Randgold and SouthernEra included the following term in their so-called Joint Venture Agreement:
"Nothing contained in this Agreement shall be deemed to constitute any party the partner of the other, nor, except as otherwise expressly provided herein, to constitute either party the agent or legal representative of the other. It is not the intention of the parties to create, nor shall this agreement be construed to create, any mining, commercial or other partnership. Neither party shall have the authority to act for or to assume any obligation or responsibility on behalf of the other party except as otherwise expressly provided herein. The rights, duties and obligations of the Parties shall be several and not joint or collective."
Clearly, there can be no doubt that SouthernEra could not prospect in terms of the prospecting permit issued to Randgold.
6. Neither Randgold nor SouthernEra applied for the required statutory permit to remove the diamonds found during prospecting activities from the property. As is clear from SouthernEra's press releases, they did remove diamonds. If proven, this would constitute a serious offence.
7. On 12 June 1997, Randgold applied for expropriation in terms of section 17. In view of the fact that SouthernEra publicly announced the M1 finding on 19 June 1997, Randgold must have known that something valuable has been found at that stage. Randgold further realised that their prospecting permit conferred no rights other than the right to prospect to them, and confirmed this fact in writing to the DME on 12 June 1997 as follows:
"...at present we have no rights to the property, other than the rights to prospect. Once we prospect and hopefully discover minerals worth exploiting we could be faced with the problem that we cannot obtain access thereto and our exploration would have been wasted."
8. Undoubtedly, Randgold (SouthernEra?) fully appreciated the risks involved.
9. This self-assumed risk, must be weighed against the severity of expropriation of mineral rights. Mineral rights, as a property right, are protected against expropriation in the Constitution of South Africa.
10. During October 1997, Randgold submitted a detailed application in terms of Section 17. From the annexures to this application it is apparent that Randgold knew who most of the heirs were. They did not contact any of the heirs. As Dr Jennings has repeatedly been quoted to say "they went through a process of silently and secretively acquiring the rights". Indeed.
11. One of the heirs confirmed that he was contacted by a prominent businessman in Pietersburg, who took him to the graveyard to point out the tombstones of his predecessors. This information was apparently used in tracing the estates of the original mineral rights holders. The heir was asked if he was willing to sign a document in respect of certain worthless mineral rights. He denied and the man refused to give any further details.
12. It should be borne in mind that Randgold did not, and does not intend to prospect or mine the M1 deposit, although it is a prerequisite of the Minerals Act that only a party intending to prospect or mine can apply for consent to prospect or an expropriation of mineral rights in terms of Section 17.
13. If Randgold and/or SouthernEra had contacted the heirs in 1995 (as they, their attorneys and their agents normally do), or even accepted the original invitation to negotiate in 1997, none of the litigation would have followed and the matter could be settled without any harm to the companies involved, or their shareholders. All that the heirs required, was to be treated in a fair and reasonable manner. At the same time the heirs remained bona fide in their attempts to settle the matter. They did not attack SouthernEra in the press, or on the Internet.
C BACKGROUND: MINERAL RIGHTS AND HEIRS
1. Several years back J Kruger, JF Naude, FAJ Grimbeek and H Skok took transfer of the relevant portions of the farm Marsfontein. They immediately sold the farm, subject to the reservation of the mineral rights in their favour. At that time, it was not necessary to take out a separate title deed in respect of mineral rights.
2. The condition reserving the mineral rights was carried forward every time the property was transferred. The latest title deeds containing the reservation was registered over the period from 1981 - 1983, in favour of the South African Development Trust (the owner of the property).
3. As a result of the manner in which mineral rights were registered prior to 1937, it was impossible for an Executor to do a mineral search if he did not have the description of the property. This is an everyday occurrence and the Deeds Registries Act specifically makes provision for these cases in Section 71 thereof.
4. It happens often that estates have to be reopened to reflect additional mineral rights that have not been dealt with when the estate was administered, because no separate records were kept by the Deeds Office in respect thereof.
5. When the heirs came to know about the mineral rights, the records of the Deeds Office were scrutinised and it appeared that the mineral rights still vested in the estates of the original four mineral right holders.
6. The Master of the Supreme Court appointed a new Executor in each estate to deal with the Mineral Rights.
7. In the first instance, the Executor applied for separate Certificates of Mineral Rights. This was done from the 1981 - 1983 title deeds, where the Mineral Rights were still reserved.
8. After extensive research into the correct procedure to be followed, NGS, a realisation company, was formed. A valuation of the Mineral Rights was done by the DME as at date of death of the four deceased holders. The Master of the Supreme Court exercised his discretion and consented to the sale of the Mineral Rights to NGS. Transfer duty was paid and a formal application was made to the Deeds Office to expedite the registration of the transfer of the Mineral Rights.
D. SALE OF THE MINERAL RIGHTS
1. Various factors were taken into consideration, the first being that the purchaser had to be willing and able to mine the deposit as soon as possible.
2. NGS could not guarantee the prospecting results published by SouthernEra, and therefor all the prospective purchasers required a prospecting period.
3. There was no formal tendering process involved, as this is private property. A number of interested parties made offers.
4. After consideration of various factors, an agreement was entered into with a party who is capable of fulfilling the objectives of the Minerals Act.
E. CONCLUSION
1. The heirs and NGS have done everything in their power to try and negotiate with SouthernEra and Randgold. Their efforts were invariably met with threats, insults, allegations and a total lack of interest.
2. In reading the transcript of the conference call held by SouthernEra, it is apparent that they are trying to cover their blunders by adding a political dimension and by threatening the Minister with international pressure. Dr Jennings has lived in South Africa for many years, he knows the country and the laws. Before spending enormous amounts of his company's money, he should have ensured that they had the rights.
3. SouthernEra has apparently not complied with even the most basic provisions of the Minerals Act, yet they want to rely on it in the face of adversity.
AN HEIR
PS The heirs and NGS are not the only people who have been bullied and threatened in relation to the Klipspringer Project. Many others are contemplating legal action against SouthernEra. |
