Junior explorer AVZ Minerals has become subject to Supreme Court action after a Mauritius-based private resources investment firm claimed ownership of a lithium deposit in the Democratic Republic of Congo, which AVZ said last month it would be acquiring a major stake in.
MMCS Strategic 1 has engaged Amsterdam & Partners and Clifford Chance to file a writ in the Supreme Court of Western Australia seeking a declaration that it legally owns rights to a mining licence that covers the Manono and Kitotolo lithium deposits in the DRC.
Last month, AVZ told the market it had struck an agreement to acquire a 60 per cent stake in the Manono project for $US6.7 million, which was to be paid to DRC-owned enterprise La Congolaise D’exploitation Minere SA and privately owned business Dathomir Mining Resources, which would end up with a 30 per cent stake and a 10 per cent stake respectively.
But MMCS is contesting the deal, arguing that the acquisition covers a licence area that is held by MMCS.
“MMCS is a 68 per cent direct shareholder in Manono Minerals SARL, a joint venture between it and the DRC government-owned Cominiere SA, which holds mining permit PE 12202 covering the Manono and Kitotolo deposits in Katanga Province,” MMCS said in a statement.
“According to the claim, in 2016 the DRC Ministry of Mines unlawfully revoked mining permit PE 12202 and issued a new permit covering the same area to a separate joint venture led by AVZ and also involving Cominiere SA.
“MMCS acted promptly to appeal the unlawful revocation of its Manono licence and this remains subject to proceedings in the administrative section of the DRC Supreme Court of Justice.
“Under DRC law, when an appeal is brought in relation to the revocation of a mining permit, the permit is deemed to remain valid until the appeal proceedings are concluded.
“Nevertheless, AVZ has proceeded to publicly inform shareholders of its acquisition of this licence, which is being challenged by MMCS.”
MMCS said it would seek confirmation from the Supreme Court as to the ongoing validity of its existing licence, and would also consider pursuing other local and international legal avenues to protect its rights over the project.
“MMCS and its legal counsel consider the circumstances and events that led to the purported revocation of mining permit PE 12202 as highly unusual and exacerbated by the subsequent grant of rights over the same area to a new joint venture involving common parties,” it said.
AVZ shares were 3.8 per cent higher to 2.7 cents each at 10:45am.