Liberation Mining (Pvt) Limited has halted operations at its Lubimbi Coal mining project in Matabeleland North pending the resolution of a shareholder dispute. This comes as the Russian investor, IR Trading, filed a court application for local partners to transfer 49 percent shareholding as agreed to in a certified agreement.
Sources told Business Times the junior miner has halted operations rendering more than 200 employees jobless. “The shareholder dispute has since led to the halting of the mining company’s operations rendering more than 200 people jobless.
This comes as it has emerged that the local investors are pursuing negotiations with new foreign investors who are offering a higher price for the coal mining grant, which was given to the local consortium in 2006.
Liberation Mining was founded in 2006 by three Zimbabweans, Peter Mutsinya, Rainor Robinson and Gavin Von Platen who entered into a joint venture agreement with Russian investor, IR Trading in 2017.
IR Trading argue in court papers that investment obligation being raised by local partners is non-existent and fraudulent since the investment to be made into the company was a commitment made by the Russians to the Zimbabwe Investment Authority (ZIA), a situation which saw the Eastern Europeans securing an investment licence and exchange control approvals.
According to the application filed under HC7042/18, IR Trading cited Liberation local directors Mutsinya, von Platen and Robinson, Liberation Mining Limited and Consolidated Growth Holdings as respondents.
What the shareholder agreement between the two parties’ entails: IR Trading obligations
If during the first year, IR Trading fails to fulfill its obligations to commence operations and investments in infrastructure, the local partners will receive back all the shares of the company without any conditions a position which IR Trading argues that all those conditions have been met and the timelines.
Also according to the agreement, IR Trading was not obliged to pay for any shares to the local partners but was supposed to take full responsibility for the Lubimbi project development right at the day of the signing of the deal and in return pay lifetime royalty to the local partners in exchange for the shares of the mining company. Information gathered say that IR Trading has since transferred close to $300 000 as advance royalty payment to Robinson.
IR Trading has to date managed to open the mine and made notable investments in the purchase of mining equipment and machinery.
IR Trading according to the agreement was supposed to receive up to 100 percent of the share capital of the mining company which owns 100 percent of the Lubimbi Coal Field project.
In its court application, IR Trading — which is represented by Dube-Banda Nzarayapenga and Partners — said the respondents have already changed goal posts on a number of occasions despite the level of commitment shown by the applicant and in fact eroding the confidence of the applicant as an investor.
The Russians said the local partners had shown untold bad faith in the transaction and in the first instance disregarded the signed agreements.
IR Trading has to date invested either directly or indirectly into the coal miner in excess of $6,2 million covering capital requirements, expenditure, incidentals and other requirements for the running of the mining operations that have been underway in Lupane.