Key points
- Trans Hex suspended mining operations at the Marshall Fork deposit effective July 1, 2002, and withdrew the mining vessel MV Namakwa from Namibian waters without prior notice to Diamond Fields.
- At a special joint venture operating committee meeting on July 3, 2002, Trans Hex cited its inability to meet performance conditions and concern over contingent penalty liabilities as reasons for the suspension.
- Trans Hex demanded that Diamond Fields amend the joint venture agreement to remove certain Trans Hex obligations and change cost and revenue sharing in its favour before resuming operations.
- Diamond Fields deemed this a repudiation of the joint venture agreement, accepted the repudiation on July 5, 2002, terminating the joint venture and entitling Diamond Fields to 100 per cent of future revenues from the deposit.
Diamond Fields’ joint venture partner, Trans Hex Group, has unilaterally suspended mining operations at DFI’s Marshall Fork deposit effective July 1, 2002, and withdrawn the mining vessel, the MV Namakwa, from the Namibian waters without prior consultation with or notification to DFI. On July 3, 2002, a special meeting of the joint venture operating committee was convened at which time Trans Hex indicated that the primary reasons for the suspension of operations and the withdrawal of the vessel were its inability to meet performance conditions stipulated in the joint venture agreement with Diamond Fields and the apprehension of a continuing contingent liability for payment of penalties under the joint venture agreement.
Trans Hex demanded, as a precondition to any resumption of mining operations and continuation of the joint venture, that DFI agree to amend the joint venture agreement to remove certain of Trans Hex’s obligations under it and to change the cost and revenue sharing arrangements under it in favour of Trans Hex. As a result of this action, DFI believes that Trans Hex has repudiated the current joint venture agreement and DFI accepted that repudiation on July 5, 2002. The joint venture has accordingly terminated as of July 5, 2002.
“Trans Hex has placed us in a difficult situation, one that however could lead to favourable consequences for DFI,” said Francis J. Waldron, chairman and chief executive officer of Diamond Fields. “Our mining operations in the past year have been profitable and have proven that our Marshall Fork deposit is robust, with grades exceeding those reported in our feasibility study. With Trans Hex’s withdrawal from the joint venture, DFI will be entitled to enjoy 100 per cent of the future revenues from the deposit.”
Diamond Fields expects to resolve this matter expeditiously so that mining operations can resume as soon as possible.
WARNING: The company relies upon litigation protection for “forward-looking” statements.
