Aquarius pays $12m to settle dispute

Aquarius Platinum has paid about $12 million to former contractor Moolman Mining to settle a four-year dispute related to its South African mining operations.

The dispute started when Aquarius rescinded an open-cast mining contrast with Moolman, a division of Grinaker LTA, at its Marikana project in December 2005.

Aquarius said the settlement amount represents a payment for work actually done by Moolman, but not paid for, plus interest since December 2005, and certain legal costs, and ignores the remainder of Moolman's counterclaims.

The counterclaims totalled $67 million.

See full company statement below:

Aquarius Platinum Limited ("Aquarius" or the "Company") is pleased to announce that the Arbitration and Litigation which Aquarius Platinum (South Africa) (Proprietary) Limited ("AQPSA") instituted against Moolman Mining, a division of Grinaker LTA Limited ("Moolman Mining") and the counter-claims made by Moolman Mining against AQPSA in 2006 have been finally settled by agreement between the parties. Pursuant to an agreement of settlement signed on 18 August 2010, AQPSA will pay to Moolman Mining, in full and final settlement of all disputes and claims between AQPSA, Moolman Mining and the MD of Moolman Mining, Mr Brian Wilmot, an amount of R86.8 million (approximately $12 million).

AQPSA rescinded its open-cast mining contract at Marikana with Moolman Mining in December 2005 on the basis of an alleged misrepresentation by Moolman Mning in respect of the foreign exchange component of the contract, also known as the "Rise and Fall" clause. AQPSA then took steps to mitigate its original damages at that point of approximately R1 billion, including the appointment of MCC as a contractor in substitution for Moolman Mining at Marikana and concluding the Marikana Poling and Sharing Arrangement with Rustenburg Platinum Mines Limited, pursuant to its duty under South African law to mitigate its damages. These steps were successful in reducing the amount of its original damages claim of R1 billion to a negligible amount. AQPSA consequently withdrew its claim for these damages, while retaining its claim for the rescission of its contract with Moolman Mining.

Moolman Mining filed four counterclaims against AQPSA, together totalling R486.3 million (approximately $67 million), plus interest on all these counterclaims calculated at 15.5% per annum from December 2005 until the date of final payment. These claims were as follows:
-R219.9 million, being an amount arising from the application of the Rise and Fall formula in the contract to the contract rate
- R33.6 million for standing time
- R68.6 million, alternatively R70.0 million, for damages ("Damages Claim")
-R164.2 million for work done by Moolman Mining in excavating the Marikana open pit and not paid for by AQPSA

AQPSA opposed all the counterclaims on the basis that none of them were payable to Moolman Mining and in any event if the Courtupheld the rescission claim on the basis of the misrepresentation by Moolman Mining, all the counterclaims would be defeated. In June 2010, Moolman Mining withdrew the Damages Claim.

The settlement amount represents a payment for work actually done by Moolman Mining (based on a re-measurement and re-audit of the Marikana open pit) which work was not previously paid for by AQPSA, plus interest since December 2005 and certain legal costs, and ignores the remainder of Moolman Mining counterclaims.