THE battle for control of Redwing Gold Mine, in Penhalonga, has taken a new twist with High Court nullifying the purported Joint Venture Agreement (JV) entered between Probadek Investments and the Corporate Rescue Practitioner (judicial manager) Cecil Madondo of Tudor House Consultants, Zim Morning Post can report.
High Court judge Tawanda Chitapi last week dismissed Probadek‘s application where they contested the cancellation of “exclusive mining rights” by Redwing Mining Company (Redwing) shareholders.
Represented by directors Patricia Mtombgera and Grant Chitate, Probadek argued that they entered a Joint Venture Agreement with Redwing on October 15 2020 and was granted exclusive mining rights.
This agreement has, however, proved to be defective and the controversial company had approached the courts after “rumours that two other companies had been given tributary agreements”.
The Mtombgera led outfit also claimed that they invested over US$300 000 in purchasing equipment and recapitalising the mine.
In his ruling, Chitapi noted that Probadek had acted in complete negation of the law when it entered into an agreement with Madondo without knowledge or approval of the mine’s shareholders.
“I submit that it is illegal to enter into agreements with third parties without seeking the approval of shareholders.
“This is particularly so where the third party seeks to acquire equity in the company,” he said.
He further stated that there was no justification for Madondo (Tudor House Consultants) to give preference to Mutombgwera and Chitate’s company over others and the practice of negotiating advisory fees with external partners, which would be converted to shares, was prejudicial to the company’s real owners.
Redwing Mine’s company secretary prayed for the removal of Madondo as Corporate Rescue Practitioner for attempting to facilitate illegal shares transfer.
“The fifth respondent’s agreement (particularly clause 45, 3 of the indefinite deal) with Probadek refers to transfer of shareholding.
“It is surprising that such issues appear when the shareholder was not consulted at all.
“Tudor House Consultants has acted illegally by undertaking to transfer shares when there is no corporate rescue plan approved by creditors,” Makotore said.
He cited the Insolvency Act which states that equity transfers must be given a green light by the business owners, which was not the case in the Probadek deal.
“It is of course false to state that the claims belonged to the applicant. The claims belong to (Redwing) with the second and third respondents (Prime Royal Africa and Better Brands) being granted rights to mine,” said Chitapi before further noting that Probadek “was typically non-specific when alleging events and being coy with facts”.
It also emerged that Probadek failed to prove its capacity to fund the US$2 million for the JV budget. Furthermore, the Mining Affairs Board had also approved two other agreements superseding Probadek’s defective one.
It was also noted the company’s “urgent application” was instituted nearly two weeks after the termination of the defective agreement.
“In relation to the urgency of the matter being based on the second and third respondents mining on the claims in dispute, the first respondent (Redwing) averred that no urgency arises because as far back as 2 December 2, (Probadek) was aware of the tribute agreements,” Chitapi said, adding it was rather strange that the applicant had sought to defend its territory or position after two months and sought to act against the other parties after having withdrawn an earlier suit against same on December 11.