OK. So there was 3 default notices by Noble. Kaboko and the...

OK. So there was 3 default notices by Noble. Kaboko and the cap'en was manged to weasel out of all of them.

1/
The first default is what is referred to by the parties as 'sale to third
party default'. The defendant says the plaintiff breached cl 8.1(1) of the
Prepayment Facility Agreement on the basis that 'the sellers [Kaboko and
AAMD] have sold product to third parties in breach of the undertaking'.
This is said to constitute an 'event of default under cl 10(b) of the
Prepayment Facility Agreement'. Clause 8.1(1) reads to the effect that
other than pursuant to the transaction documents the sellers will not 'sell
or otherwise dispose of or create an interest in any product produced by it
and which is to be sold to the buyer under the offtake agreement …
without the buyer's prior written consent'

The plaintiff says the defendant's letter of 21 July 2014 does not
provide any particulars of the allegation. Nor, it is said, does the letter of
1 August 2014. No time period pertaining to the alleged breach is
specified and no particular incident or conduct is identified. The plaintiff
says the allegation is so vague and lacking in detail that this, in and of
itself, must give rise to a dispute as to whether there has been a breach.
Furthermore, on 25 July 2014, the plaintiff made an announcement to the
ASX in which it expressly disputed the default allegation. Further, the
plaintiff says the restated agreements contain contractual procedures for
reconciliation or resolution of disputes in relation to ore that has been
mined for the purposes of the parties' arrangements: see cl 9.4 of the
Restated Offtake Agreement. The plaintiff points out no attempt has been
made by the defendant to utilise these procedures.

In answer to the plaintiff's position, the defendant refers to an email
dated 16 June 2014 from Mr Robertson of the defendant to Mr Landau of
the plaintiff. The defendant raised the issue of the plaintiff's supply of
manganese ore to third parties. Mr Landau responded in terms which the
defendant says is an admission of a supply to third parties. A copy of the
relevant email appears at attachment MR-5 to Mr Robertson's affidavit.
Relevantly, the email reads;

Cap'en Email.
It was made very clear to your people on the site visit that the sales were
made to ensure local partners and tenements were kept in tact to ensure
there would be no problems in the sale of the project to noble [sic] -if you
consider that destructive I would suggest you get on a plane to zambia
[sic].  

In response, the plaintiff points to an email from Mr Van Heerden of
the plaintiff sent to Mr Robertson on 1 March 2014. This email appears
as part of attachment MR-2 to Mr Robertson's affidavit. Relevantly, it
reads as follows;

If you refer to the 68 tons of material sold to the indian smelter, you should
also be aware that Mr Chikonde had 210 t of material on the mine when
we took it over. He has requested that we sell it on his behalf and our
intention is just that. No material mines [sic] by Impondo since the
agreement was signed have been sold.

So basically ore mined and paid by Aussie investors was sold under the table to keep locals happy.

The Judges conclusion and where Noble will probably go next.

The matter does not need to be developed any further. It is clear
there is a dispute between the parties as to whether or not there has been a
breach of the agreement and I am satisfied the dispute is genuine. It may
be that the one allegedly sold by the plaintiff was owned by a third party.


2/
The second alleged default is what is referred to as the 'JORC
Resource Statement default'. This alleged default is also asserted in the
letters of 21 July 2014 and 1 August 2014. In essence, what is alleged is
that the plaintiff and AAMD failed to prepare a JORC Resources
Statement in respect of the PECO project by 30 September 2013. It is not
in dispute between the parties that no such report was prepared by the due
date. It would appear then there is an event of default. The plaintiff
points to cl 10 of the Amended and Restated Payment Facility Agreement.
That clause is headed 'Events of Default'. By cl 10(b)(ii), if there is an
event of default which amounts to a 'failure to comply' and that default is
capable of remedy, then the defendant is obliged to provide the plaintiff
with five business days to remedy the default. The plaintiff says this was
not done and it is arguable there is no default.

So a default would have happened if Noble gave 5 days notice as there is no way the JORC report would have been completed. (If ever started) Weaseled out of that one.
Has Noble now given them 5 days???

3/
The third alleged default is that the plaintiff (by its directors) made
'untrue' statements, representations or warranties regarding the ownership
of 'specified licences' in a letter of 11 January 2013: see attachment MR-8
to Mr Robertson's affidavit.
The focus of this dispute is a licence designated 13704-HQ-SML.
There would not appear to be any dispute that, at all material times, this
licence was owned by a party other than the plaintiff. It is in relation to
this dispute the Building Terms Sheet is relevant.  


(13704-HQ-SML Mansa Project Mansa, Northern Zambia  75% shown in Q)

It seems clear from the document that prior to the entry of the parties
into the Building Terms Sheet, the defendant had concerns about whether
or not the plaintiff actually had ownership of all the relevant licences.
Clause 4 of the Building Terms Sheet refers to the plaintiff agreeing 'to
sell, or procure the relevant entity to sell' the 'commercial licences'. As
was submitted by the plaintiff, verification of the ownership
13704-HQ-SML was not expressed to be a condition precedent in the
terms sheet. Furthermore, there is an email correspondence between
Mr Robertson and Mr Landau and a Mr D'Sylva which had raised
questions about certain of the licences, including 13704-HQ-SML. It
would seem to me, based upon the documents available, there is a real
question as to whether or not the defendant, through its agents, knew the
ownership of the tenement by a party other than the plaintiff. In the
circumstances, I am satisfied it is arguable there was some form of
acquiescence or waiver on the part of the defendant such as would call
into question the right of the defendant to terminate the agreement for
default.

Gosh. I thought KAB owned 75% of this as stated in every Q and Annual. My mistake of believing ASX announcements. Wonder who does own it.

It's clear Noble did not dot the I's and T's in regards to the default notices and has enabled KAB to weasel out of what seems to be clear defaults.

It's also pretty clear that Noble wont make the same mistake again.

So here's something new. KAB after the default were to sell the permits to Noble.
"The Company will seek any appropriate settlement negotiations with Noble. Q"

In exchange for the payment by the defendant, the Vendors agreed to
'sell or procure the relevant entity to sell the [commercial licences] within
Mansa Manganese and Impondo Zambia'. Particulars of the licences,
including the relevant registered holders, are set out in cl 4 of the terms
sheet. The defendant was to pay to the plaintiff a royalty of $5 per tonne
of saleable manganese exported from the 'commercial licences'. By
cl 3(b) of the terms sheet, the parties contemplated the payment of
$US250,000 to the plaintiff 'on the basis that the purchaser conducts a site
visit to verify current stockpiles in good faith'.

The terms sheet stipulates that the 'completion of the acquisition' is
conditional upon the satisfaction (or waiver) of numerous conditions
precedent which include:
1. verification of the plaintiff's manganese ore inventory on the
commercial licences;
2. preparation of a 'formal purchase agreement' which, upon
execution, would terminate the prepayment facility and the offtake
agreement - the 'comprehensive' purchase agreement was to
incorporate the terms and conditions in the terms sheet and
'additional terms and conditions appropriate for a transaction of
this nature';
3. the parties (that is, each of the vendors and purchasers) obtaining
consent and acknowledgement from local partners in respect of
each of the commercial licences; and
4. finalisation and presentation of a complete and updated geological
report.
11 The timeframe stipulated for these things to occur was 'on or before
5 pm (WST) on 30 June 2014'. In the event this did not occur (or was not
extended in writing), 'the agreement constituted by this terms sheet will be
at an end and the parties will be released from their obligations under this
terms sheet'.  

So there you have it. Slippery than a well greased up pig.
I doubt Noble will give up on getting their $6.3m worth of bacon.