Bloomberg News

Gertler Settles Over Missed Payments Following Congo Mine Flood

July 29, 2011

July 29 (Bloomberg) -- Fleurette Properties Ltd., a company owned by Israeli mining investor Dan Gertler, said it settled a claim over a missed debt payment following flooding at a copper and zinc mine in the Democratic Republic of Congo.

The claim in London’s High Court was settled on July 27, Lior Chorev, a spokesman for Fleurette, said in a phone interview yesterday from Boston, Massachusetts.

Palensia Investment Ltd., registered in the British Virgin Islands, on March 25 sued Fleurette for more than $104 million and Gertler for $15 million as guarantor of the debt after the Gibraltar-based company missed part of an $8 million debt payment, according to documents submitted to the court.

“Fleurette was at all times on the right side of the moral and legal argument in this matter,” Chorev said, without giving details of the settlement, which he said are confidential. “Fleurette had the ability to pay all sums under its agreement with Palensia. Fleurette feels fully vindicated by its actions throughout the proceedings and settlement negotiations.”

Patrick Doris, Palensia’s lawyer, declined to confirm or deny that there had been a settlement when reached by phone today in London. He didn’t comment further.

Congo’s Kipushi mine, which is controlled by Fleurette, flooded in November when electricity problems caused its pumps to malfunction, forcing emergency measures to drain the site, the Kinshasa-based le Potentiel newspaper reported on March 25. Kipushi is undergoing a feasibility study that aims to bring it back into production. The mine, which may produce about 140,000 metric tons of zinc and 11,000 tons of copper per year, according to a 2007 contract for the operation, has been closed since 1993.

Palensia Investment

Chorev said in a separate interview on July 21 the dispute between Palensia and Fleurette arose after Palensia, which in 2006 and 2007 invested in projects including Kipushi, sought to recoup its original investment that was devalued during the 2008 global economic slowdown. Palensia had previously partnered with Fleurette and its affiliates on several occasions, securing it “substantial profits” over a short period of time, Chorev said last week.

In the lawsuit, Palensia sought $104.4 million, the unpaid balance that Fleurette owed, and $15 million from Gertler, plus 10 percent interest per year on both sums, according to documents submitted to the London court.

Gold, Silver

Kipushi is 30 kilometers (18 miles) southwest of Lubumbashi, close to the country’s border with Zambia. The mine’s ore deposits contain metals and minerals including zinc, copper, gold, silver, cadmium, germanium and sulfur. A 2003 study of Kipushi’s deposits measured 16.9 million tons of ore, containing 392,755 tons of copper and 2.83 million tons of zinc. Production at the mine peaked in 1988 when it produced 143,000 tons of zinc and 43,000 tons of copper.

Gecamines, Congo’s state-owned copper mining company, and Switzerland-based United Resources AG in February 2007 signed a joint venture to develop Kipushi, with United Resources promising a $400 million investment, according to the agreement. United Resources was renamed Kipushi Resources Holding AG, before it was liquidated in November 2009, according to Swiss registry filings.

--Editors: Paul Richardson, Antony Sguazzin.

To contact the reporters on this story: Franz Wild in Johannesburg at fwild@bloomberg.net; Michael J. Kavanagh in Kinshasa at mkavanagh9@bloomberg.net.

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net; Andrew J. Barden at barden@bloomberg.net.


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