THE BOURSE WHISPERER: Stonewall Resources (ASX: SWJ) announced a win handed down by an Arbitral Tribunal appointed under the rules of the Hong Kong International Arbitration Centre (HKIAC).
Stonewall said the Tribunal determined in favour of the company’s claim for damages against Shandong Qixing Iron Tower Co., Ltd.
The drawn-out claim against Shandong arose from Stonewall’s termination of a Share Sale Agreement back in November 2014.
“We are very pleased that the arbitration award brings this process to a successful conclusion,” Stonewall Resources chairman Trevor Fourie said in the company’s announcement to the Australian Securities Exchange.
“Importantly, the amount awarded by the Arbitral Tribunal was based upon its acceptance of a valuation (US$127.5 million at 19 November 2014) of Stonewall’s South African gold assets, which is significantly higher than the current value placed on these assets by the market.
“Our focus is on realising the value of these assets to generate a return for our shareholders and reward their patience and forbearance.
“Payment of the award in favour of Stonewall will inject over $10 million cash to our balance sheet, which we intend to direct towards the development of our South African gold mining operations.
“Our immediate focus is on the re-commencement of gold mining and production at our Pre-Mined Residue (PMR) project to generate early cashflow and earnings for our shareholders.”
Stonewall explained that since its claim was determined in accordance with Australian law and resolved by arbitration, in English, under the HKIAC rules, the award is therefore enforceable against Shandong in China by Chinese courts.
The Arbitral Tribunal delivered its final award on 1 September 2016, in which it directed:
Shandong is to pay Stonewall US$12.6 million; plus interest on that amount at 8 per cent, compounded quarterly, commencing 1 January 2015 until paid;
Shandong is to pay Stonewall’s legal costs of $1,498,678 and is to bear 100 per cent of the Tribunal’s costs of HK$1,899,765.25;
Shandong will also have to cover 100 per cent of the HKIAC’s administration costs of HK$407,961.99.
Previous to the Find, Stonewall had entered into a funding agreement with a consortium of shareholders and associates who are entitled to 45 per cent of the award as well as reimbursement of the costs that they funded.
Stonewall said its Board of directors will now carefully evaluate the company’s position following the award, stating its intention to keep the market informed as it brings the PMR project into production targeting 25,000 ounces of gold per annum by 2017.