Diamond Fields International (DFI-T) has filed suit with the High Court of South Africa seeking US$19.5 million in damages against former partner Trans Hex Group.
The suit refers to Trans Hex’s unilateral suspension of production on July 1, which it followed a few days later by terminating the joint venture altogether. The cancellation came just over a year after the partnership began and six years before it was to have ended.
In March 2001, Trans Hex agreed to mine Diamond Field’s Marshall Fork and Diaz 12 zones in exchange for half the profits. By the fall, the miner had begun to openly complain of geological complexities and low production rates, going so far several months later to lower its 2002 forecast.
However, according to Diamond Fields, the pullout was about money, nothing more. Trans Hex was not achieving mining rates specified in the agreement for which it was liable.
“That’s why they pulled the vessel — it was all about these performance warranties,” Horng Dih Lee, chief financial officer, told The Nothern Miner when the deal’s cancellation was announced.
Diamond Field’s cites two reasons for the claim: Trans Hex’s repudiation of the agreement and its refusal to sell Diamond Field’s its MV Namakwa airlift mining vessel. The latter relates to an option the junior says it had.
Diamond Fields shares ended the day unchanged, at 38. However, since the suspension, they have lost 55% of their value.
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