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First Quantum Minerals Ltd. announced that the British Virgin Islands Commercial Court has rejected an application by Highwind Properties Limited, Pareas Limited, Interim Holdings Limited, and Blue Narcissus Limited (the Highwinds Group), all subsidiaries of Eurasian Natural Resources Corporation PLC, to summarily dismiss First Quantum’s legal claim in relation to the cancellation of First Quantum’s Kolwezi tailings project in the Democratic Republic of Congo.
The Court’s decision to reject Highwinds’ application means that the case brought by First Quantum’s subsidiary, Congo Mineral Developments Ltd., should now proceed to trial, at which Highwinds will need to explain its involvement in the unlawful cancellation of First Quantum’s interest in the Kolwezi Project. In particular, it will need to explain how it came about that it signed a contract to acquire the Kolwezi permit the very same day First Quantum’s contract was cancelled and why, as a term of that contract, Highwinds agreed to pay for the DRC’s legal costs to defend the DRC’s conduct in arbitration. Highwinds was also ordered to pay CMD’s legal costs and has indicated its intention to appeal the decision. Background to the proceedings In September 2010, CMD filed a claim in the BVI against the Highwinds Group, which claims to hold an interest in the Kolwezi Project tailings permit. First Quantum took this action as part of its efforts to pursue its rights in relation to the unlawful cancellation of its legal title to the Kolwezi Project. The legal action includes claims for inducement of breach of contract and interference with contractual relations and property rights. First Quantum’s damages are estimated to exceed $2 billion. The Highwinds Group applied to have the case dismissed and the matter was argued in a two day contested hearing before the BVI Commercial Court in July. When the Kolwezi Project was cancelled First Quantum had already invested over $400 million in a plant on site, which was 75% completed, and prior to the DRC’s cancellation, was scheduled for commissioning by no later than May of 2010. As a result of the cancellation, over 700 Congolese have been out of work since August 2009, and the social programs instituted by First Quantum, including an almost completed hospital, and HIV-Aids and Malaria treatment programs were as a result cancelled. ENRC announced on August 20, 2010 that it had purchased 50.5% of the outstanding common shares of Camrose Resources Limited, which through its ownership of the Highwinds Group has a 70% interest in the Kolwezi Project. In addition to legal proceedings against the Highwinds Group, First Quantum is continuing to advance its rights against the DRC through the ICC international arbitration. |
