Rockwell faces lawsuit over DRC project

Posted: Wed, 15 Oct 2008

John Bristow

[miningmx.com] --True to the well-known adage �Africa is not for sissies�, yet another mining company has run into legal and operating problems in the Democratic Republic of Congo (DRC).

This time it�s TSX and JSE-listed Rockwell Diamonds (Rockwell), which has fallen into a legal dispute with one of the owners of the exploration permit to its Kwango River project. Cape Town-based businessman Michel Zoumis brought a legal action against Rockwell in June in the supreme court of British Columbia, Canada. The �statement of claim� alleges that Rockwell �failed to acquire the rights and interests in the Kwango project�. It claims a range of damages, among them for serious and continuing decline in Zoumis� �business, mining concession, trade and reputation� as well as for �past and future loss of income�. The legal papers do not specify the amount of damages claimed but, according to Michel Zoumis� brother, Alexander, the claim is for C$50m. Rockwell CEO John Bristow said: �We have responded to that claim and believe there is no merit in it.� A statement in Rockwell�s results for the three months to end-August published on Wednesday said: �The company will obtain formal legal advice from counsel and evaluate its available remedies. �Although the outcome is not currently determinable, the project is not a material operation of the company. During the third quarter of fiscal 2008 the company paid consideration of $600,000 to Midamines in order to increase the size of the concession.� Rockwell�s main operations are in South Africa, where it runs four plants recovering alluvial diamonds along the middle Orange River. The results for the six months to end-August show a loss before tax of C$4.6m (six months to end-August 2007 - C$3.6m profit) and a headline loss of C$2.1m (C$4.9m loss). The company is fighting off a hostile takeover bid from Swiss-based Pala Investments, which has built up a 20% stake in Rockwell and is offering C$0.36 a share for the rest. Rockwell shares were quoted on the TSX today at $0.19. Rockwell bought the Kwango River project - known as PPE331 - in 2006, along with a number of SA mining ventures from private SA investment company Durnpike. According to a Rockwell release at the time, Durnpike had an agreement with Midamines to �manage and carry out exploration and mining on a portion of PPE331, as contractor for and on behalf of Midamines, and is entitled to an 80% share of the net revenue from the sale of any diamonds produced from the contract area�. Wednesday�s statement from Rockwell said that �one of the 50% shareholders of Midamines has, subsequent to the conclusion of the Midamines agreement, denied the validity of that agreement. �The other 50% shareholder disputes this view and remains committed to the Midamines agreement. �Due to this dispute, Midamines has not afforded Durnpike access to the site and assistance as regards its proposed operations on the site, in the manner contemplated in the Midamines agreement. �This failure has significantly delayed the company�s proposed operations on the site and it is consequently the company�s position that the required royalty payments have been suspended for the duration of the dispute.�

Jean-Louis Kayitenkore
Procurement Consultant
Gsm:  +250-08470205
Home: +250-55104140
P.O. Box 3867
East Africa
Blog: http://www.cepgl.blogspot.com
Skype ID : Kayisa66

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