Holding Statement

September  2010

In response to the media coverage concerning The New Reclamation Group (Private) Ltd’s (”Reclam Group”) mining interests in Zimbabwe, and the rights of Mbada Diamonds (Private) Ltd (“Mbada”), Reclam Group records the following:

  • “Mbada is a 50/50 joint venture which was established pursuant to agreements negotiated and concluded in August 2009 in Zimbabwe between Grandwell Holdings Ltd (“Grandwell”), a subsidiary of Reclam Group, and Marange Resources (Private) Ltd (“Marange”).
  • The objective of the joint venture is to explore, develop, mine and market diamonds from the northern portion of the Marange Concession Area (“the Concession Area”) in Eastern Zimbabwe, under Special Grant 4720

As part of the due diligence undertaken by Reclam Group prior to the establishment of the joint venture, Reclam Group conducted an investigation in relation to both the mineral resource and the legality of the joint venture’s rights in the Concession Area and established the following:

  • On 19 February 2004, the Mining Commissioner, in order to regularise the gold mining activities in the Chimanimani Area (in which the Concession Area falls), reserved an area (“the Reservation Area”), under Reservation Notice 1518, against prospecting and mining in accordance with section 35 of the Mines and Minerals Act (“the Act”) with effect from 20 February 2004
  • The Act precludes the issue or registration of Certificates of Registration in the Reservation Area subsequent to the declaration of the Reservation Area
  • Subsequent to the declaration of the Reservation Area, it was not legally permissible to peg blocks or sites within such area and any Certificate of Registration issued in respect of a block or site situated within the Reservation Area was subject to cancellation under the provisions of section 50(1)(a) of the Act. Mining activity can only be conducted in a Reservation Area by the holders of Special Grants
  • Since the Concession Area is situated within the Reservation Area, a Special Grant had to be issued in terms of the Act prior to mining activity being conducted within such area
  • Marange holds Special Grant 4720 which covers the entire Concession Area. Mbada has been granted the right to conduct mining activities within such area by Marange
  • Since 2007, African Consolidated Resources plc (“ACR”) and certain of its subsidiaries ("the ACR subsidiaries") (collectively “the ACR Group”) have instituted various proceedings in various courts in Zimbabwe asserting that the ACR Subsidiaries are the holders of claims ("the ACR claims"), as evidenced by Certificates of Registration ("the Certificates of Registration"), in the Concession Area
  • The ACR Group contended that it registered its claims between 4 April 2006 and 1 June 2006. As the area within which the ACR claims were situated had been declared a Reservation in 2004 and ACR has never applied for or been granted a Special Grant, its contentions in this regard are untenable which fact has, as appears below, been confirmed by the High Court of Zimbabwe.
  • The ACR Group's assertions as to the validity of the ACR claims are premised entirely on a High Court of Zimbabwe Judgment handed down by the Honourable Justice Hungwe in September 2009 ("the September 2009 judgment") pursuant to an application ("the ACR application") by the ACR Group under case number HC6411/07. As detailed below, the September 2009 judgment has been rescinded, is void ab initio and of no force and effect
  • As a consequence of the fact that certain blocks or sites registered ('the Certificates of Registration") in the names of the ACR Subsidiaries were situated in an area which had more than two years prior to such registration been reserved against prospecting and pegging , the Secretary ("the Secretary") of the Ministry of Mines and Mining Development , in accordance with the provision of Section 50 of the Act, served notice on the ACR Subsidiaries cancelling the Certificates of Registration.
  • A High Court application attempting to preclude the Secretary from carrying the cancellations into effect was dismissed and an appeal lodged with the Minister was similarly unsuccessful. As a consequence, the Certificates of Registration were cancelled during late March 2010. There are no third parties who are currently asserting rights over the area being mined by Mbada Diamonds (Private) Limited.
  • As appears above, the assertions by the ACR Group that the ACR claims are valid are based on the September 2009 judgment. In July 2010 Judge Hungwe agreed to hear an application from the Minister of Mines in which application an order was sought rescinding the September 2009 judgment on account of fraudulent non-disclosures of material facts by the ACR Group.
  • A formal rescission application was launched in the High Court of Zimbabwe in July 2010. The rescission was premised on the fact that ACR had fraudulently secured the September 2009 judgment in their favour by willfully failing to disclose the following material facts ("the material facts") –:
  at the time when the Certificates of Registration were issued, the ACR Subsidiaries had not as yet been incorporated and were accordingly non- existent and could never have acquired any rights in terms of the Act.
     
  The ACR Group was aware that the Reservation Area had been declared with effect from 20 February 2004 and that this precluded the Certificates of Registration from being validly issued to the ACR Subsidiaries; and
     
  On 6 September 2010 ("the Rescission judgment"), Judge Hungwe found that -
     
  the ACR Group fraudulently concealed the material facts from the Court and procured the September 2009 judgment in their favour as a consequence of their fraudulent conduct. On this basis, Judge Hungwe rescinded the September 2009 judgment ("the rescission");
     
  in light of the true facts, the ACR Subsidiaries did not (and could never have) acquired the ACR claims; and
     
  the ACR Group does not have any title to any claims within the Concession Area (which includes, without limitation, the blocks or sites covered by the Certificates of Registration, which Certificates had, as detailed above, been cancelled during late March 2010).
  • The effect of the rescission is that the September 2009 judgment is void and any appeal pending in respect of the September 2009 judgment has been rendered academic.
  • The ACR Group has expressed the view that its appeal against the Rescission judgment suspends the operation thereof and the September 2009 judgment accordingly remains the only effective judgment. The Reclam Group has been advised by its legal counsel that the ACR Group's assertions in this regard are misleading and legally untenable. The correct legal position is that –
  in the ordinary course, the noting of an appeal against a civil judgment suspends a party's ability to execute the positive relief granted by the court in favour of that party. In contrast, the dismissal of an application constitutes a refusal by the court to grant any relief and accordingly there is no relief to suspend pending an appeal against it;
     
  the September 2009 judgment (which operated in favour of the ACR Group) has, pursuant to the rescission thereof, been replaced with an order which effectively dismisses the ACR application;;
     
  the effect of the rescission is that the September 2009 judgment is void. It cannot be revived by an appeal against the Rescission judgment;
     
  the ACR Group's appeal against the Rescission judgment does not suspend the dismissal of the ACR application.

FAQ’s

When was the Concession Area declared a Reservation Area?

On 19 February 2004, the Zimbabwean Mining Commissioner, in order to regularise the gold mining activities in the Chimanimani Area, reserved an area against prospecting and mining in accordance with section 35 of the Act with effect from 06h00 on 20 February 2004.

What are the implications of a Reservation Area?

  • It is not legally permissible to peg blocks or sites within a Reservation Area
  • The issue of Certificates of Registration is precluded within a Reservation Area subsequent to declaration of the Reservation concerned
  • Any Certificates of Registration issued in respect of a block or site situated within a Reservation Area is subject to cancellation under the provisions of section 50(1)(a) of the Act
  • Any mining activity in a Reservation Area can only be conducted in terms of a Special Grant issued in terms of the Act

Who can mine in a Reservation Area?

Any mining activity in a Reservation Area can only be conducted by a party so authorized in terms of a Special Grant issued in terms of the Act.

Has a Special Grant been issued? Who is the holder of that grant?

Marange holds Special Grant 4720 and is empowered and has agreed to Mbada conducting mining activities within a portion of such area.

Is Mbada in contempt of court for continuing to mine in the Concession Area despite pending legal proceedings?

No, Mbada is not and has never been in contempt of any court order

Was due diligence conducted by Reclam Group prior to engaging with the Zimbabwean Government in a joint venture?

Yes, Reclam Group conducted an investigation in relation to both the mineral resource and the legality of the joint venture’s mining rights in the Concession Area. In addition, Marange conducted an extensive investigation into Reclam Group, assessing both its financial and technical capabilities.

How many concessions have been granted to mine in the Concession Area?

Two concessions have been granted. Mbada has been granted one of these concessions.

Who owns the second concession?

Canadile Mining.

Is there a relationship between Canadile Mining and Reclam Group?

No.