Eastern Platinum (Eastplats) has cancelled the private placement of shares announced in October to raise $10.3m stating that “the company and the placee have mutually agreed to terminate the proposed investment.”
A statement released to SENS on Wednesday morning added the decision not to proceed with the placement was, “ without cost or penalty to either, as they were unable to reach agreement on the final terms and conditions sought by the company” and that Eastplats would have, “no obligation to pay the finders’ fee that had been contemplated as part of the proposed investment.”
The cancellation follows close on the heels of an announcement by Eastplats on December 9 that it is being sued by Chinese firm Hebei Zhongheng Tianda Platinum (HZT) in the British Columbia Supreme Court.
The civil action relates to the sale agreement struck in June this year between HZT and the former management of Eastplats through which Eastplats agreed to sell its Crocodile River Mine (CRM) to HZT for $50m.
The Eastplats board was subsequently ousted and replaced by a new board made up of representatives of material shareholder Ka An Development Company and with a new CEO – Diana Hu.
In November, the new Eastplats management published its discussion and analysis review for the September quarter results in which it stated, “ the completion of the CRM transaction is subject to a number of conditions” and pointed out that, at a special meeting held on October 12, “85.53% of the shareholders represented voted against the CRM transaction.”
The review added that “new management is continuing its review and investigation of the company’s rights and obligations and attending to satisfaction of its covenants under the CRM purchase agreement.
“At the present time the CRM transaction has not been completed or formally terminated. It is uncertain whether conditions for completion under the CRM purchase agreement will be satisfied, or if the transaction …….will be completed, terminated or otherwise resolved.”
According to Eastplats, HZT is now suing for “specific performance of the purchase agreement or damages in lieu thereof and costs”. Eastplats said it “intends to vigorously defend against the action and to refute many of the facts and allegations made in the claim.”
CRM is Eastplat’s main operating asset and it reported produced annualised production of 152,000 ounces of platinum group metals (PGM) in the September quarter of 2010 before it was shut down in 2012 amid declining platinum prices.
