Johannesburg -Eastern Platinum (Eastplats), the Toronto and JSE-listed platinum producer, was preparing to fend off a civil suit by China-based Hebei Zhongheng Tianda Platinum (HZT), it said on Friday.
The civil claim was for the alleged breach of a deal that would have seen HZT acquire Eastplats’ Crocodile River Platinum Mine (CRM) for $50 million (R690 million).
The platinum producer said the civil claim was for the alleged repudiation and breach of the CRM share-purchase agreement signed in June.
In terms of the agreement, HZT would have acquired a 100 percent equity interest in Barplats Mines, which owned CRM.
Eastplats, which is now majority owned by Hong Kong-based Ka An Development, said HZT had filed a notice for a civil claim in the British Columbia Supreme Court against it and several of its subsidiaries. “The action seeks, among other relief, specific performance of the purchase agreement or damages in lieu thereof and costs,” said Eastplats.
“The company intends to vigorously defend against the action and to refute many of the facts and allegations made in the claim. Once the company and its subsidiaries have been formally served with the claim, they will respond in due course,” it said.
The news of the civil suit comes as the Competition Commission last month approved the deal, saying it found that the proposed transaction was unlikely to substantially prevent or lessen competition in any market in South Africa.
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The commission also found that the proposed transaction was unlikely to raise any public-interest concerns.
Easplats, which has a R601 million market cap, has been rocked by a boardroom battle that has seen shareholder Ka An Development succeeding in ousting the entire former Eastplats board.
George Dorin, a financial services veteran, was elected chairman, while Diana Hu has since been appointed chief executive.
They replaced Eastplats’ entire board of directors, led by David Cohen, who was former Eastplats president and chief executive with 25 years' experience in mining and Canadian markets under his belt.
Read also: Eastplats' losses widen in first half
Problems
Ka An Development Company had bought $15 million worth of Eastplats shares - about 12.8 million, equal to 13.79 percent of the company.
The company has had its fair share of problems because of the platinum price rout dating back to May 2012, when it suspended funding for the development of the Mareesburg open-pit mine and construction of the Kennedy’s Vale concentrator plant.
It curtailed development and operations of certain portions of the Crocodile River mine, and in August 2013 placed the entire Crocodile River mine on care and maintenance. The platinum price dropped below $900 an ounce by late last year before recovering slightly to levels of about $990 in May.