Martin Kadzere Senior Business Reporter
MARANGE Resources has obtained permission from the High Court to proceed with its US$2 billion lawsuit against Core Mining Resources and Minerals for financial prejudice after the latter allegedly misrepresented it had money to invest in a diamond mining venture. Marange, a State-owned diamond miner, is a subsidiary of the Zimbabwe Mining Development Company. It partnered Core Mining to form Canadile in 2009 to exploit diamonds in Marange.
Last week, High Court judge Justice Francis Bere granted leave (permission) to serve Core Mining, under final liquidation, with summons through the service of the Sheriff of the Gauteng High Court.
The liquidators, Selwyn Trakman and Satish Roopa, are also being cited as respondents.
Mr Lovemore Kurwoti, a principal shareholder and director in Core Mining, is alleged to have made false representations that the company was a subsidiary of Benny Steimetz Group Resources, a well established international mining company.
BSGR was to provide financial, technical and machinery support to the joint venture with Marange.
As a result, the ZMDC approved the joint venture believing that it was dealing with BSGR.
It was, however, discovered that Core Mining was not in any way related to BSGR and the international mining firm had no interest in the project. In addition, Core Mining did not have financial and technical resources required for the joint venture project.
The guarantors of Core Mining’s financial obligations were Yehuda Licht and Subrithy Naidoo, who had no connections with BSGR, nor did they have capacity to honour their guarantee. Marange, through ZMDC, then instituted an investigation to establish the extent of fraud. The joint venture was subsequently terminated in October 2010 because the agreements entered between the two were considered to have no effect from the beginning.
“As a consequence of (Core Mining) representations, (Marange) suffered serious financial prejudice in that (Marange Resources) did not receive the expected investment in value of US$200 million in the joint venture which would have achieved a return of US$2 billion,” according to court papers filed by Marange. “Had (Marange Resources) known the true facts, it would not have signed the agreements.”
Last year, a South African court granted a liquidation order against Core Mining after the company failed to settle its debts. According to papers filed at South Gauteng High Court, an applicant, Babcock Africa Services, which operates the Volvo franchise in SA, said Core Mining had failed to pay close to R11 million for equipment supplied.
Core Mining had made an application for adjournment of the liquidation hearing to allow Zimbabwean courts to finalise criminal charges against some of its directors. But the South African court ruled that a favourable outcome to Core Mining was “nebulous” and “speculative” to warrant an adjournment of the hearing.