Online Reporter
Business Reporter
THE Supreme Court recently dismissed an attempt by Fawcett Security to place Gwanda-based Vubachikwe Mine under corporate rescue as an abuse of court process.
The ruling has since been lauded by Duration Gold — owners of the mine — as a “measured, principled and unimpeachable” handling of a protracted legal dispute.
The case, which spanned more than two years, originated from an application by Fawcett Security, then led by chairperson Mr Andy Laing, seeking corporate rescue for the mine over an alleged outstanding debt that the mining company has described as insignificant.
According to Duration Gold spokesperson Mr Robert Mukondiwa, funds to settle the debt were made available through Forbes and Thompson, the entity under which Vubachikwe Mine operates, but were rejected by Fawcett Security.
“It was perplexing, and indeed suspicious, that a creditor would decline settlement of an acknowledged obligation and instead embark on a protracted and aggressive pursuit of corporate rescue,” Mukondiwa said. “This was not a case of inability to pay, but rather a refusal to accept payment.”
The High Court initially dismissed the matter after Fawcett Security’s legal representatives — from the Bulawayo-based Masamvu Da Silva Gusto Law Firm — conceded that they had failed to properly serve all affected parties.
Fawcett proceeded to appeal to the Supreme Court.
In its ruling, the apex court found that the continued pursuit of the case constituted an abuse of process.
The determination, Mr Mukondiwa said, “speaks volumes about both the substance of the claim and the quality of legal counsel underpinning it.”
Duration Gold was represented by Mr Tawanda Zhuwarara, whose handling of the matter Mukondiwa described as “meticulous, disciplined and firmly anchored in law.”
While the litigation temporarily delayed expansion initiatives at Vubachikwe Mine, the company said the Supreme Court’s final ruling now allows for renewed investment.
“With legal certainty restored, Duration Gold can now move decisively to invest, recapitalise and enhance production at Vubachikwe Mine without let or hindrance,” Mukondiwa said.
He added that the case should reassure both domestic and international investors.
“It affirms that Zimbabwe’s courts are not a theatre for opportunistic litigation, but rather institutions of justice that safeguard lawful enterprise.”
Nasty fight over gold mine
Matters came to a head around 2024 when mine owners Forbes & Thompson accused one of the creditors, Fawcett Security Operations, of trying to place the mine under corporate rescue as part of a plot to engineer a hostile takeover by London Stock Exchange-listed Kavango Resources.
Fawcett made an application on April 25, 2024 to put Vubachikwe under corporate rescue in terms of Section 124 (1) of the Insolvency Act, arguing that it was “heading towards insolvency” and “owes various creditors, including workers, the Zimbabwe Revenue Authority and ZESA Holdings, more than US$10 million.”
However, the mine’s managing director, Mr Allan Dolan, who is also a majority shareholder in Forbes & Thompson through Duration Gold, claimed Fawcett’s application was “mali fide” as it had refused payment of the US$181 067,50 it was owed, which betrayed its complicity in the plot. In revelations made in an opposing affidavit filed on May 10 the same year, Forbes & Thompson says there was an ongoing conspiracy by some United Kingdom and Bulawayo-based parties to orchestrate a hostile takeover of the mine through the corporate rescue route.
It alleged the brains behind the plot was Mr Benjamin “Ben” Turney, a United Kingdom-based businessman and now ex-chief executive officer of Kavango Resources Plc, a London-listed junior mining company that is controlled by the Kansagras, a wealthy family of Indian descent with roots in Kenya.
Mr Turney was reportedly working in concert with Marida van der Spuy and Rob Forfar — two former senior managers of Duration Gold — to pressure Mr Dolan to sell the mine to Kavango for a song.
The former mine owners, the Thompsons, were also reportedly conspiring with both Mr Turney and Fawcett.
It was further alleged that during the course of 2023, the two attempted to turn Vubachikwe staff against Mr Dolan, undermine the mine’s financial position, steal and provide confidential information to Mr Turney, as well as fabricate amounts said to be owed to several creditors, such as Motor Maintenance Systems (run by one Mr Marc Mitchell) and Carbon Processors (run by Mr Julian Nicholas).
In the affidavit, Forbes & Thompson also claimed Mr Andy Laing was being used as a front for the application to settle scores with current Vubachikwe shareholders following a fallout between Mr Dolan and the Thompson family, who are former owners of the asset and are reported to be associated with Mr Laing.
“This application, though filed in terms of provisions of Section 124 (1) of the (Insolvency Act) as an application for corporate rescue is in fact not an application for corporate rescue in terms of its substance,” said Mr Dolan then in the opposing affidavit.
“The background to the application is that the applicant and a few creditors, some of whose claims are denied and have been challenged in court, have teamed up with a United Kingdom-based entity with local representation that is attempting to take over the business from the first respondent (Forbes & Thompson) by way of a hostile takeover. The applicant has filed this application in an attempt to achieve this end, an issue which will become clear once the court considers the full extent of this affidavit and the relevant annexures . . .
“It is Ben Turney and Kavango that has since conspired with certain of first respondent’s creditors and two former senior managers to come up with this application . . .”
Ulterior motive
The reported refusal by Fawcett to accept the money it was owed and its insistence on pushing for the corporate rescue route made Forbes & Thompson believe it was doing Kavango Resources’ bidding to wrest the business from its current shareholders.
“If indeed the applicant was only interested in recovery of its debt, which should be its only interest anyway, why did it not immediately welcome the offer for payment and provide the requested account details and accept payment?” added Mr Dolan.
Mine owners also struggled to understand why the security company did not execute on its security if it wanted to recover the debt, as it was securitised over a mortgage.
There is also the issue of why Fawcett was interested in the going concern status (or viability) of the mining company if its security services were terminated.
Added Mr Dolan: “I submit, therefore, that this is a mala fide application that does not have genuine interests of any of the stakeholders of the first respondent.”
Solvency
Vubachikwe, which was put under care and maintenance after an illegal strike in November 2022, also claimed “it is not true” that “there is no capacity and or willingness to settle the debts”, as it had since paid several creditors under the Restart Project, which was premised on investing more resources into the mine in order to restart operations.
“The key shareholders, who include creditors who are owed more than 75 percent of the liabilities of the first respondent have either been paid in full or agreed to settlement arrangements which have been put in place,” said the affidavit.
Over US$1,6 million was reportedly paid to creditors over a 12-month period.
It also declared sums not to be due, disputed or under verification of US$1,5 million.
The mine also claimed that as of May 10, 2024, on a book-value basis, its assets exceed liabilities by US$21,6 million, as well as by US$32,1 million when a conservative indicative valuation of the mine’s resources prepared by VBKOM (independent mining consultants) is used.
Its current assets in the same period were US$300 000 (excluding a Zimra refund due of US$1 840 968), while current liabilities stood at US$161 065.
Forbes & Thompson further alleged that part of the inaccuracies spread through the 2024 application was the claim that the mine owed Zimra US$2 671 658 when, in fact, according to the tax management body’s TARMs system, it is Zimra that owes Vubachikwe US$1 840 968.
Through shareholder investment loans, Vubachikwe reportedly also owed its beneficial shareholder, Duration, US$12 925 039, representing over 90 percent the total amount owed by the mine.
There were fears and growing anxieties that putting Vubachikwe under corporate rescue would not only spook shareholders who intend to bankroll the entity to restart operations but would also put a “very complex gold mine” into inexperienced hands that would potentially run it into the ground.
Vubachikwe is now considering suing for lost profits.
“We are mulling options to recover millions of dollars of damages against Fawcett and its co-conspirators for lost profits due to almost two years of paralysis due to Fawcett abusive and malicious corporate rescue application,” said Mr Dolan last week.
Bongani Ndlovu