An obscure patch of ground in central Zambia has become the subject of an ungainly tussle between three junior Australian resources companies.
ASX-listed Volt Resources, which had previously been trying to get a graphite project in Tanzania off the ground, announced in May it had secured a deal to acquire the Luiri Hill project, northwest of the Zambian capital of Lusaka.
With the gold price soaring, and with Volt also announcing it had picked up some prospective gold ground in Guinea, the news helped trigger a 540 per cent surge in Volt’s share price.
Luiri Hill itself sounded particularly enticing: an analysis of old technical data from the project allowed it to calculate a resource containing more than 850,000 ounces of gold, while it is also home to large leach pads of gold-bearing ore sitting at the surface that suggested a potentially fast path towards production.
Volt had also obtained Luiri Hill’s project database — a compilation of historical drilling data, modelling, reports and studies that Volt said would have cost more than $US20m and taken several years to replicate.
Excited investors last week overwhelmingly voted in favour of acquiring Luiri Hill from Zambian vendors Cupriferous for $3.75m in shares and $250,000 in cash. Only 0.39 per cent of shares voted against the deal.
But what those investors did not know was that Volt’s rights to that valuable technical data were in dispute.
Months before Volt secured its agreement with Cupriferous, Westate Capital, run by Chris Davis and Paul Beresford, had also been looking at Luiri Hill.
While they didn’t secure a deal with Cupriferous, they did contact the London-based liquidators of Cradle Arc, a collapsed company that had once held the Luiri Hill project. Westate managed to secure a deal to purchase from those liquidators the rights to all the data attached to Luiri Hill, including technical information held by consultants Coffey in Perth.
Since seeing Volt’s announcements that it had “obtained” the Coffey technical data for Luiri Hill, Westate sent off letters through their lawyers to Volt demanding they return or destroy the information.
Those lawyers also wrote to the ASX, saying it was clear that Volt had relied on the data that was owned by Westate.
“Our client is concerned that the company is (or will be) seeking to raise money from investors without disclosing the lack of entitlement to make use of the Coffey information, or even the claim to such a lack of entitlement,” Westate’s lawyers, Solomon Brothers, wrote.
Westate and Volt were not the only companies eyeing Luiri Hill.
Back in January, ASX-listed minnow Jacka Resources paid the Luiri Hill vendors a $60,000 refundable deposit for a non-binding letter of intent over the asset.
Earlier this month, Jacka told the exchange its formal demand for a refund of the deposit had gone unanswered.
“Jacka is considering its legal remedies for recovery of the deposit paid pursuant to the LOI, which may include, but would not be limited to, recourse for the consideration payable to the vendors under the proposed transaction with Volt,” Jacka told the exchange.
Volt chief executive Trevor Matthews, meanwhile, is adamant that Westate’s complaints were without merit.
The law in Zambia, he said, is that the rights to technical information belong to the state.
“You can’t just create intellectual property rights because a liquidator wants to sell you some information,” Mr Matthews told The Australian.
“We refute their position and we are in the process of obtaining formal advice from the Zambian government on their position.”
If nothing else, he said, the level of interest being shown in the asset suggests Luiri Hill is worth pursuing. “The fact that other parties are trying to become involved in the process and trying to extract some sort of value out of it says there is obviously value in what we are trying to achieve
VRC Price at posting:
1.9¢ Sentiment: Buy Disclosure: Held
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