Tinashe Makichi Business Reporter
A local consortium, Zindico, has filed a $20 million lawsuit in London (UK) against Asa Resources (former Mwana Africa) for rescinding a sale and purchase agreement signed in 2013 involving a 26 percent stake in Freda Rebecca, a unit of the Pan African resources company.
The lawsuit is targeted at China International Mining Group Corporation (CIMGC), the biggest shareholder in the miner.
Asa previously dismissed Zindico’s previous intention to litigate on the basis that the consortium had failed to file its heads of argument within the prescribed time set by Zimbabwean law.
The UK headquartered Asa, however, confirmed on Friday that it had been served with papers from Zindico.
“As the company has previously announced, the board considers these claims to be without either foundation or merit and is instructing its legal team in Zimbabwe to file the requisite paperwork with the court in Zimbabwe,” said Asa Resource.
The High Court in May this year ruled that Zindico Consortium could submit their claim to Asa Resource Plc and its subsidiary company Asa Gold Mauritius (formerly Mwana Africa Mauritius) in London.
Asa had indicated that it doesn’t have offices in Harare where the papers could be served. Zindico subsequently filed an application for edictal citation (permission to sue a foreign-based person), which was duly granted.
It is understood that a share purchase agreement signed in 2013 gave Asa Plc the right to acquire 26 percent of Freda Rebecca. CIMGC gained a stranglehold in Asa — then Mwana Africa — in 2012 and pushed out its founder and chief executive officer Mr Kalaa Mpinga.
The new Chinese investors, however, did not recognise the commitment made by the old management. The takeover of Asa Resource was expected to usher a new era into the group which entailed the restarting of a smelter at Bindura Nickel Corporation.
CIMGC’s entrance was envisaged to open up opportunities for additional access to Chinese capital and markets. There hasn’t been any additional funding to Asa by the Chinese investors.
Instead, the Asa board recently reported that $4,3 million was missing from Freda Rebecca. The company’s board is expected in Harare this week to try to mend the reputational damage caused by the recent scandals.