Perth-based Strike Resources Ltd has commenced legal proceedings against a Peruvian company and its associates to end uncertainty relating to its iron ore assets in the country.
Perth-based Strike Resources Ltd has commenced legal proceedings against a Peruvian company and its associates to end uncertainty relating to its iron ore assets in the country.
The legal action comes in the wake of Strike exercising it options earlier this month to purchase a 38.5 per cent interest in Peruvian company Apurimac Ferrum S.A. for $36 million.
AF is the 100 per cent holder of the Cuzco and Apurimac iron ore projects in Peru.
Relating to this matter, Strike noted that D&C Group S.A.C, a shareholder of AF, is taking steps to suspend, the effects of the AF Shareholders Agreement as to Strike´s right to exercise the options.
Strike said it had received a number of clear legal opinions from leading Peruvian lawyers, all of which support its view that D&C's claims have no merit.
"This advice forms the basis of Strike's pre-emptive proceedings against D&C, which have been commenced to obtain a definitive legal ruling rejecting D&C's claims and removing its ability to air such claims in the future," Strike said.
A copy of Strike's announcement is below:
Strike confirms that it has commenced legal proceedings against D&C Group S.A.C. and its associates (D&C) in order to finally and conclusively deal with D&C's unfounded claims relating to Strike's flagship Peruvian iron-ore assets, as outlined in Strike's market announcement of 2 June, 2008.
Strike has received a number of clear legal opinions from leading Peruvian lawyers, all of which support the Company's view that D&C's claims have no merit. This advice forms the basis of Strike's pre-emptive proceedings against D&C, which have been commenced to obtain a definitive legal ruling rejecting D&C's claims and removing its ability to air such claims in the future.
The alleged judicial precautionary measure (JPM) sought by D&C, as outlined by Strike in its market announcement of 2 June, 2008, would in any event be an interim measure designed to preserve the status quo of the parties. A JPM requires the petitioner (in this case, allegedly D&C) to commence arbitration to conclusively deal with the substance of its claims, as a JPM makes no determination on the merits of a claim. To the best of Strike's knowledge, as at the date of this announcement, D&C has failed to fully effect a JPM that suspends the AF Shareholders Agreement and has not commenced any arbitration proceedings.
D&C's failure to take the substantive steps referred to above required to back its claims is causing market uncertainty, is unacceptable to Strike and reinforces Strike's view that D&C's claims are groundless and are designed simply to extract a commercial benefit from Strike.
Given D&C's inaction, Strike believes that it is best to take matters into its own hands by pro-actively commencing legal proceedings against D&C. In these proceedings Strike is seeking a declaration that the AF Shareholders Agreement, the exercise of the options under that agreement and the IAC transaction remain valid and binding on the parties and that, accordingly, Strike holds a 68.15% interest in AF.
Strike is also seeking damages against D&C for any losses it may suffer as a result of what it believes are groundless claims by it.
In addition to a general right to damages for losses suffered as a consequence of D&C's actions, under the AF Shareholders Agreement Strike has a specific right to recover a penalty from D&C in the amount of US $17.5 million if D&C is found to have improperly challenged Strike's increased ownership in AF and the effects of the AF Shareholders Agreement.
Strike will vigorously prosecute its claim against D&C and will keep the markets appraised of developments in its arbitration as they occur. The first step in this action is the convening of an arbitration panel of 3 members, appointed by the Lima Chamber of Commerce. This panel is expected to be convened in the next few weeks. The panel will then set a timetable for the future conduct of this action. Whilst the Company is not able to give precise details for the timing of these proceedings, it notes that arbitration proceedings are generally regarded as an efficient and reliable dispute-resolution mechanism in Peru, and that therefore these proceedings should be concluded in a reasonable timeframe.
Strike continues to advance its iron ore projects in Peru and, as previously announced, the pre-feasibility study for the development of a 20 million tonne per annum iron ore mine in the Apurimac project area is nearing completion.
In addition, Strike continues to advance the 2 million tonne per annum Cuzco Lump Project from the Cuzco project area.
