UK private equity firm Appian Capital Advisory has filed a claim for compensation in the High Court of England and Wales for about $1.2bn from Sibanye-Stillwater after the South African firm terminated two related transactions.
Sibanye-Stillwater agreed in October to buy Atlantic Nickel and Mineração Vale Verde (MVV) from Appian Capital – two companies that hold Santa Rita and Serrote, the latter a copper mine that was at the time ramping up to full production.
The transaction was part of Sibanye-Stillwater’s diversification into battery metals production and followed other transactions worth more than $1bn in the year. However, in January Sibanye-Stillwater withdrew from the deal following a geotechnical event at Santa Rita which it said severely damaged the mine’s economic case.
Appian Capital said today that it was yet to receive “any contemporaneous evidence to support its alleged assessment that the geotechnical instability amounted to a material adverse effect (MAE)”. Agreements to buy assets in the mining sector typically contain MAE clauses owing to the high risk nature of mining.
In addition, Appian Capital claimed Sibanye-Stillwater had harmed the reputation of the company and the two assets as a result of its comments. The geotechnical event had drastically reduced the six year life of its open pit by two or three years, said Sibanye-Stillwater earlier this year. Appian Capital argued the event was minor and could be expected to occur at a mine in its life cycle.
While Santa Rita had significant underground resources, Sibanye-Stillwater characterised these as ‘blue sky’ options.
“Sibanye’s failure to close the transaction and incorrect public statements in relation to Santa Rita mine have materially damaged the market perception of Atlantic Nickel and Appian,” the private equity firm said. “Through these proceedings, the company is seeking to recover its losses in full.”
It added that Sibanye had “… improperly relied on the event to avoid its legal obligations and that Sibanye wished to terminate the SPAs (sale and purchase agreements) for commercial reasons unrelated to the geotechnical event”.
Sibanye-Stillwater confirmed today in a statement that it had received the claim, adding that it would “defend the claim”.
Neal Froneman, CEO of Sibanye-Stillwater, told Miningmx in February he was confident the firm was in its legal rights to pull the transaction. Sibanye-Stillwater’s lawyers had examined its decision to withdraw from the transaction “every which way”, he said.
“We didn’t take the decision lightly. We have substantial open cast expertise in the group which we brought in because of our move into these areas,” he said.
“We reject both Appian’s apparent strategy, and the substance of its comments. Its public characterisation of the geotechnical event experienced at Santa Rita is both superficial and wrong,” the company said in February.
“If Appian decides to commence proceedings, we shall vigorously defend our position and are confident that we will prevail,” the company said previously.