I’ll try not to go over old ground after what has been posted in between events today but this is solely my notes and in some cases my opinions on events, I will clarify which is which. Be aware that not everything can be head from the public gallery and in particular I find Bennett seems to mumble a lot in comparison to Donaldson (KDR SC).
10:15 we kicked off and the judge asked if Mr Bennett (MZN) would be closing his case.
He responded no, and proceeded with wanting to clarify the term Net Smelter Royalty/Returns and what it meant (this had been used the day before as a defence I believe, i.e NSR could not be calculated at the point an agreement was meant to be in place). He proceeded to reference a precedent case which was previously unreported and I think the case was Neo metals 1989. Bennett wanted an adjournment of proceedings so he could do more research and consult industry experts to corroborate the term NSR ( Net Smelter Royalty), this all came about due to KDR submitting files late yesterday detailing that NSR could not be calculated as a resource had not been calculated – this becomes more clear in KDR closing arguments / statements.
Essentially KDR SC (Donaldson) argued the point that Net Smelter Royalty and the precedent case in question came up in all legal search engines (aka google legal for those with access) and considering that NSR had been a part of the offer that had been advising on then Bennett has had enough time to research its meaning. KDR SC wanted the item quarantined and
only to be revisited if the situation arose whereby NSR was the last technicality the case hung on. Bennett has given advice on the MZN proposal and surely must know what NSR means.
Bennett argued against it f(quarantine) or completeness sake, the judge decided against Bennett and had the item quarantined. KDR were willing to have the reference to NSR deleted to allow proceedings to move on.
In my opinion the judge seemed appreciative of KDRs willingness to delete reference to NSR and this was a tactic MZN were using the stall proceeding even further.
Masters V Cameron is heavily referenced throughout today and this appears to be due to the rulings in that case and the close relativeness to this one, I only understood this more toward the end of the day.
Then after some discussions we went on to KDR’s expenditure on exploration at Mount Holland. It was deemed that KDR only spent $1.8M on exploration between 4 April16 and October 16. I felt that MZN wanted this highlighting so they weren’t hit with exorbitant charges if this trial goes against them. That was my opinion.
KDR again played to the judge and expressed that they had a full detail of their closing arguments to save time.
Martin Donohue took to the stand and immediately Bennett looked to discredit his character through his ban by ASIC in 2003, Bennett also seemed to try to paint Donohue as a guy that changed his mind after he wrote to ASIC to say he would accept a life ban but a few years later applied to have the ban varied. Bennett then went on an hour long tour of KDR being a Gold explorer (Donohue corrected him and said gold and base metal explorer).
Bennett continued with a detail of how Donoghue tried to take over KBL mining and Donohue connections with Capri. Some of you may want to research this but my thoughts were that Bennett was painting the picture that Donohue and Capri are besties and would do anything for each other. That may be true – my opinion.
A lengthy discussion went on about Capri’s involvement with Mount Holland and the forfeiture of tenements by previous owners and how the owners of these tenements at the time of the supposed MZN offer had still been in contention. The previous owners being MH Gold, Convergent and Montague Resources.
It all started to get very murky here and to be honest I lost interest and I’m not sure the judge cared either looking at his face. This becomes clearer in closing arguments.
Bennett then went on to paint a picture of KDR company finances as at around 21
st Mar 2016, KDR were indebted to the tune of approx. $6.54m to Capri who owned 16% of KDR. Bennett began also talking about Simon Tritton who was about 8
th largest shareholder of KDR at the time.
Tritton become the focus later as him supposedly being the person that tipped Donohue off about the Lithium at MH.
Bennett also seemed to be angling that MZN were the first interested party through the door.
Donohue was asked when he first became aware that pegmatite material was at MH, he said when he walked in the office at MH and saw core sample pic on the wall with a ‘pegamatite’ label. This brought about a few smirks in the room.
I was also watching KDR legal team for long periods during the morning and there was a point made before this ‘pegamatite discovery’ where they seemed concerned about something, a couple of unsettled looks and a rummage through files and the calm was restored, I don’t know what it was in reference to.
Discussion was had around Burbanks and the JV which Martin agreed wasn’t going smoothly and Burbanks wasn’t producing as it should. This set the scene for Bennett to trying to get at the KDR finance situation although MD had already stated in his witness statement that MZN’s offer would not make a dent in the debt of KDR and there was no rush to find a buyer for the lithium rights to MH.
A bit of skirting around other potential suitors to the Li rights and then Bennett mentioned a text that Martin had sent to JT saying that KDR Lawyers had and a major shareholder had thrown a curve ball into the mix regarding MH. It turns out the major shareholder referenced was Tritton and the legalities were around the complexities of the tenement ownership at Mount Holland (this cam out later in the day). Martin said he had not wanted to let JT down and felt bad that he was backing out of negotiations and that was why he had mentioned a major shareholder.
Bennett tried to argue that Tritton was a seller of KDR stock at the time but Martin said he didn’t know this and didn’t keep tabs on Trittons share dealings.
Bennett detailed the offer that was made to KDR and KDRs SC (Donaldson) intervened asking where this was going, he commented that MZNs case and plea is about a contract being formed as a written instrument which is acknowledged does not exist.
Personally I think he had had enough, Bennetts ramblings seem to be going nowhere and in the end they amounted to nothing – My opinion, as boring as it sounds here, you should have been in court!!
The KDR legal team looked almost amused/bemused at what had gone on for the past couple of hours.
We broke for lunch at 12.30 and resumed at 2.15pm.
Bennett again went on about texts and emails and the contents of them. He seemed to request a document reference but KDRs legal team revelled in telling him that he himself (Bennett) had stuck that document out yesterday- Bennett made the a comment along the lines of “and on goes life”.
Bennett then questioned Martin about Gold resource at MH and the cautionary statement in the KDR ASX announcement and asked if he had an obligation to correct the announcement with regards to the gold resource estimation. Martin looked perplexed by the question and answered ‘No’.
I’m not sure where this question was intended to go and looing by the surprised looks on KDR legal team they were none the wiser either.
Martin was stood down and Peter Lester was sworn in. Peter lasted all of 15-20min in the box, his questioning bemused me, it amounted to nothing and he stood down. I know
@Un1qu3Nam3 has mentioned his thoughts on this and maybe it was to trip Lester up on technicalities, technicalities seem a big part of MZN case in my opinion.
Donaldson (KDR SC) went into his closing statements and again referenced Masters Vs Cameron as well as other precedent trials. The rulings of Masters Vs Cameron feature heavily here and discussion was had around the 4
th ruling not applying if the 2
nd rule didn’t exist and to get to the 2
nd rule the first had to exist. Not being conversant with the legalities I made what notes I could but thought they made excellent discussion to observe and felt more educated afterwards.
The judge seems to speak the same language as Donaldson and they seem to have a decent understanding.
In the closing statements Donaldson (KDR SC) stated that the MZN Pleas and whole case is based around the so called binding agreement of
4th April 2016. He then detailed that KDR did not own the tenements (or the original tenement holding companies, i.e Montague resources, MH Gold) until 7
th July 2016 so how could they sell the rights to something they didn’t own. He also expressed that each tenement was a variation on every type of tenement available in WA, i.e mining, exploration etc so how can they sell the Li rights to them if no exploration had yet been carried out an a tenement.
A small technicality in my eyes.
KDR have never transferred the tenements into their own name and since acquiring them have kept them in their subsidiaries names. This is how I understood this technicality.
The agreement that MZN wanted was to acquire the rights to pegmatitic material at MH including Li, Tin, Tantalum but also detailed a NSR to be paid on the resource at MH. Both the judge and Donaldson said it was absurd that a smelter royalty be paid on a resource which had not yet been dug out of the ground. Donaldson pushed that this proved the contract was null and void and had not yet become legally binding. He also warily / cautioning the judge as to how he was going to rule on the term ‘pegmatitic material’.
He pressed on about Miss Higgins (is she KDRs in house legal??) concerns around the deal being complex and hard due to the amount of tenements and the different tenement ownership statuses and also the tenement licence, i.e exploration, mining.
It was also mentioned that KDR and MZN weren’t even on the same page about how may tenements were affected, 56 or 59 and MZN only ever mention the Mount Holland project, Donaldson basically wished the judge good luck in defining what the MH project was.
Donaldson spoke about the HoA and the judge remarked that when he (the judge) was in law school a heads of agreement was an agreement to agree and is in effect no agreement (contractually).
Donaldson mentioned MZN’s conduct subsequent to the supposed 4
th April agreement for the Li rights. The agreement is mentioned nowhere in MZNs board minutes until Nov.
The judge also mentioned the fact that Eaton (MZNs original lawyer) admitted that at the time of the supposed agreement (4
th April) KDR didn’t own the shares in MH Gold or Montague and hence did not own MH in any way so how can Marindi satisfy itself with these terms.
Apparently there was an impromptu ‘boozy’ meeting, in Melbourne between 13
th April and 13
th May when MZN asked MD if another deal could be struck. I am not sure if this was at a by chance meeting at an industry conference.
Donaldson commented and I quote " It was at this point (I think point 20) your honour that I stopped (looking for inconsistencies in the plaintiffs plea with regards to the offer,) this was either through chivalry or boredom, I can't be sure which".
I nearly choked suppressing a laugh and thought that summed up the whole trial and what we have all thought!
The judge seemed happy with Donaldsons closing statements and then requested information for tomorrow around continuous disclosure rules from the ASX. Donaldson commented that KDR did not think they had a deal to be disclosed to the market, the judge responded in acknowledgement of that fact but asked for some background material.
A lot of the detail can also be gleaned from some of the posts of other court lurkers that were there today. Apologies that mine is not full of detail but more of a word for word account.
At the end of the day my summation was that KDR have paid for their beefed up legal team. MZNs seemed to consist of Bennett and 2 juniors.
The judge is very much talking the same language as Donaldson (at least he was today)
Bennett spent the day going around in circles and not achieving very much, unless there is a hidden gem (pardon the pun) in there somewhere then I know which horse I am backing.
One last thing that Donaldson did say he was worried about was MZN using the claim of secured income (from future operations) as a way of paying for the deal and NSR’s (on a resource hahahaha). Donaldson said if they do this to drag things out then he will be ready for it and will deal with it when it happens but he hopes they won’t try to use it. He seems peeved to me.
Anyway, that’s my summation and notes. It is hard to keep track when they jump from point to point, precedent case to precedent case etc.
As mentioned earlier, the courtroom public gallery consists of shareholders of both sides, quite a few friends of MZN (from what I could make out – old boys club) and I know for a fact Hartleys were there as I heard the talking outside. I suspect Capri were and a few other investment types.
Is this over? I dunno.
I have a feeling MZN want to drag this out as much as they can and cause pain, it seriously feels like sour grapes about the deal that was almost (but never was) done.
