The court has granted multinational giant Honeywell only a frac-tion of what it was claiming from South African fluorspar miner Sallies.

Since the days when Peter Flack headed Sallies, the media have been repeatedly warned of the possibility of the court granting Honeywell its full R65-million claim, which could have burnt a whopping hole in Sallies’ pocket.

The issues hung over the company, which has just entered into operational profit, like the proverbial Sword of Damocles.

But the court eventually arrived at a considerably moderate figure, far less than what Honeywell wanted.

“The Sword of Damocles is now gone,” Sallies CEO Tom Dale tells Mining Weekly.

The International Chamber of Commerce International Court of Arbitration says that Sallies and its fluorspar-mining subsidiary, Witkop, are obliged to pay roughly a fifth of what multinational Honeywell had claimed.

The arbitration arose when the company decided it was wrong to have to supply fluorspar to Honeywell at an uneconomic price.

Honeywell wanted $6 847 305 
plus interest and costs or 
$4 514 457 plus interest and costs, but the court ruled that it should receive $1 243 824 plus interest at 5 % a year since January 19, 2006.

Sallies says that interest to date is $200 000 and that each party is to bear its own legal costs, which Sallies has been accounting for.

‘We would have liked to have won, but the Sword of Damocles has gone,” says Dale, adding that the ruling removes a long-standing risk which has been hanging over the business since 2006.

The full downside exposure of R86-million has been cut down to an estimated R14-million.

“We are studying the detailed 59-page award document and formulating our response.

“Our own legal and other costs have been fully accounted for and declared in audited and reviewed financial statements, but as recently stated, no provisions have been made 
for either the award or the interest.

“The company is exploring various settlement options and remains in a sound liquidity position,” Dale says.

On April 3, Dale, announcing a turnaround to an operating profit of R45-million for the six months to December 31, told Mining Weekly that the company was sufficiently liquid to deal with most eventualities.
“From a liquidity point of view, whatever arises, we’ll be able to cope.”

The profits were the result of better operations and higher sales volumes, with revenue doubling and the company having cash on hand.

Sallies’ flagship Witkop oper-ation sold 60 251 dry metric tons (dmt) of fluorspar in the half-year period, which was up 15% on the 52 445 dmt sold in the previous period. 
Owing to closure during October 2008, sales at Buffalo were 41% lower, at 5 930 dmt.

The average international market prices for acid-grade fluorspar for the 2008 calendar year improved sharply to 
$301/dmt free on board.

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