PRECIOUS metal producer Sibanye-Stillwater has encountered a legal setback in its ongoing $1.2 billion (R15 billion) dispute with Appian Capital Advisory LLP following a ruling delivered in the High Court of England and Wales.
The proceedings, which began in June 2024, focused on the termination of share purchase agreements (SPAs) between Sibanye-Stillwater and Appian, associated with the acquisition of the Santa Rita and Serrote mines in Brazil.
The root of this dispute lies in a geotechnical event that occurred at the Santa Rita nickel operation in Brazil in November 2021, which Sibanye-Stillwater argued was significant enough to adversely affect the mine’s business and finances.
On 24 January 2022, Sibanye-Stillwater moved to terminate the SPAs with Appian after the collapse of a pit wall at one of the mines, leading to the legal proceedings that have unfolded over the past year.
Sibanye-Stillwater had planned to buy Santa Rita, one of the top nickel mines, and Serrote copper mine, as well as a 5% net smelter royalty over potential future underground production at Santa Rita.
Appian Capital subsequently brought a $1.2bn compensation claim against Sibanye-Stillwater. However, Sibanye-Stillwater contended that no compensation ought to be paid as Appian Capital received multiple alternative offers for its mines, eventually selling the operations, which also include the Serrote copper mine, for $1bn.
In a judgment handed down yesterday, Justice Butcher ruled against Sibanye-Stillwater, which had hoped to justify its termination based on the geotechnical event.
The court concluded that the incident was not reasonably expected to be materially adverse, thus invalidating the company's rationale for ending the agreements with Appian.
Nevertheless, the court dismissed Appian's claims of wilful misconduct against Sibanye-Stillwater, with the judge acknowledging that the management genuinely believed they acted in the company's best interests.
Looking ahead, the proceedings will transition into a second phase, scheduled for a trial in November 2025, known as the Quantum Trial. This stage will primarily assess the potential damages Sibanye-Stillwater may incur as a result of the contract termination.
Sibanye-Stillwater maintained its stance that Appian had opportunities to sell the Santa Rita and Serrote mines to other buyers at comparable prices following the termination, making any claims of loss unfounded.
Interestingly, the judgment highlighted that Appian did receive multiple offers for the mines after the termination, reinforcing Sibanye-Stillwater's argument in the upcoming trial.
As the situation develops, Sibanye-Stillwater is determined to defend its position vigorously in the Quantum Trial, aiming to mitigate possible financial repercussions.
This legal battle underscores the complexities of mining operations where operational decisions can lead to significant financial and legal challenges.
Stakeholders will be watching closely as the case unfolds in the lead-up to the next court date, with the future implications for Sibanye-Stillwater potentially substantial.
BUSINESS REPORT