Tiger Resources Limited – Resolution of Potential Contract Dispute at Kipoi Project
Tiger Resources Limited to advise the potential dispute in respect of the contractual arrangements governing the Kipoi project has been resolved.
Managing Director David Young said: “With what appears to be the start of another period of relatively high copper prices the board of directors took view that it was in the Company’s best interests to find a settlement rather than postponing development of Kipoi while defending our position in the DRC court system. The timely development of the project is viewed as integral to creating shareholder value. The resolution allows management to be fully focused on meeting the target of first copper production in mid 2010.”
In November 2006 Tiger Congo sprl, an 85% owned subsidiary of the Company (collectively “Tiger”), entered into an agreement (“Agreement”) with various parties (“Vendors”) to acquire 100% of Congo Minerals sprl (“Comin”) in stages. Comin owns 60% of SEK sprl, which is the holder of licences covering the Kipoi project in the Democratic Republic of the Congo (“DRC”). The remaining 40% of SEK sprl is owned by Gecamines, a DRC State owned company.
Tiger has met all its obligations to date pursuant to the Agreement, as amended, including making all payments due to date to the Vendors. On 29 July 2009 Tiger paid the Vendors US$5.59 million in order to acquire a further 23% and increase its interest in Comin to 50%. Tiger is required to pay the Vendors a further US$12 million on or before 29 May 2010 in order to acquire the remaining 50% interest in Comin.
On 3 August 2009 the Company advised that it had received a letter from the Vendors implying that they may seek to dispute the amount paid by Tiger to increase its interest in Comin to 50%, and to avoid complying with their obligations under the Agreement.
Tiger’s legal counsel, comprising DRC, Australian and international counsel, advised that whilst Tiger had a strong case there was uncertainty as to the likelihood of Tiger successfully defending its interests in the DRC Courts, and that any Court action would be a long, time consuming and expensive exercise. As a result Tiger sought a commercial settlement to the matter. Tiger and the Vendors have now agreed to settle this potential contract dispute on the following terms:
– Tiger to pay the Vendors US$2.55 million by 18 September 2009. – The Vendors acknowledge Tiger has met all contractual obligations to date and is entitled to its 50% shareholding in Comin. – Tiger assumes board control and management control of Comin.
– Upon payment by Tiger of the amount due on or before 29 May 2010 into the trust account of an escrow agent, Tiger is authorised (without further recourse to the Vendors) to transfer the remaining 50% shareholding in Comin to Tiger (so that Tiger holds 100% of Comin).
Tiger reiterates that it has at all times complied with and met its obligations pursuant to the Agreement. The Board of Tiger formed the view that based on the uncertainty as to the likelihood of Tiger successfully defending its interests in the DRC Courts, the costs associated with a potential Court action, the inability of Tiger to develop its lead project during a potentially long Court process, the significant expenditure to date by Tiger at Kipoi, and the significant value of Tiger’s interest in the Kipoi project (particularly following the recent strengthening of the copper price), that a commercial settlement on the terms negotiated was the optimal solution. Tiger will fund the additional payment to the Vendors from existing cash reserves. Tiger is confident this matter is now resolved and there is no scope for the Vendors to make further claims against Tiger.
