[miningmx.com] — THE Department of Mineral Affairs (DMR) has cancelled the ban on sales of associated minerals by Lonmin.
Lonmin CEO Ian Farmer told Miningmx that the group’s financial and operating position was “back to normal’ bar the on-going dispute with Keysha Investments which he said now had to go through a lengthy process involving a series of legal hurdles.
The DMR has also granted all the Section 102 applications by Lonmin for rights over associated minerals except for the ground over which Keysha has been granted a prospecting licence.
Farmer commented, “We don’t think Keysha has a case and, in the unlikely event that they do eventually win, Lonmin’s financial exposure is minimal.
“They would only be entitled to the profit made on revenue from sales of associated minerals from the area subject to their prospecting right after we have deducted the operating costs. That sales revenue totalled only $11m in 2009.’
While everything now appears back on an even keel Farmer said there remained a “fundamental difference of opinion’ between Lonmin and the DMR over the terms of conversion of the group’s old order mining rights in 2006.
Lonmin – then run by previous CEO Brad Mills – was the first platinum major to convert its old order mining rights.
Farmer commented, “I don’t want to get into a battle of press releases with the DMR but their release of August 10 was not entirely accurate.
“We have a fundamentally different interpretation to the DMR over the terms of conversion of our old order mining rights in terms of the Minerals and Petroleum Resources Development Act (MPRDA).
“We went through that conversion process acting in good faith and in the spirit of the MPRDA and the Mining Charter.
“We are of the view that the conversion process gave us security of tenure in the new order rights over all the minerals we mined previously under our old order rights.
“In our application we did reserve our rights for the associated minerals and, in the spirit and letter of the conversion process, we should not have had those rights taken away from us.
“If the DMR thought we had missed something then surely they could have picked up the phone and pointed it out to us?
“They never did and we only became aware that there might be a problem when we discovered Keysha had applied for that prospecting right.
“At that point we took legal advice and applied separately for the rights to our associated minerals in terms of Section 102.
“We were the pioneers in this process and I believe that opened the door for a third party to exploit the ambiguities that existed in the situation around associated minerals.’
Farmer said Lonmin remained entitled to mine and dispose of associated minerals from the area now subject to the prospecting right awarded to Keysha despite not having its Section 102 application for that ground approved.
He commented, “Keysha brought an interdict against us on this matter earlier in 2010 which was unsuccessful.
“They now have to go through a series of legal hurdles. We have taken the award of the prospecting right to them by the DMR on review.
“If we don’t like the outcome of that review process then we can take the matter to court. They also have to convert that prospecting right into a mining right for it to have any real value.
“From Lonmin’s point of view I feel we are in a good place financially and in good shape regarding the dispute with Keysha.’
Farmer declined to comment on what action Lonmin might take against former non-executive director Sivi Gounden who is linked to Keysha.
“I am not prepared to comment on that. It’s a highly sensitive matter. The Lonmin board will take whatever action it decides upon.’
Gounden – a former director-general of the department of public enterprises and former CEO of Bateman Engineering – has told MiningWeekly that he had conducted himself “with full integrity.’
