TORONTO (miningweekly.com) – Canadian project developer Platinum Group Metals (PTM) on Thursday announced that it had won a dilution dispute against a South African empowerment partner.

PTM in November last year declared a dispute with Wesizwe Platinum subsidiary Africa Wide Prospecting & Exploration over the extent of dilution of Africa Wide’s interest in PTM’s Western Bushveld Joint Venture (WBJV) Project 1, 35 km north-west of Rustenburg.

This resulted after the empowerment partner failed in October 2013 to fund a R213-million (about C$22-million) cash call for its 26% share of an approved six-month construction budget for Project 1.

The matter went to arbitration and on August 20, PTM received a favourable award. The arbitrator ruled in favour of PTM, determining that Africa Wide's shareholding in the operating company, Maseve Investments 11, would fall to 21.2766% as a result of the company's failure to fund its share of the cash call in October 2013.

Based on the dilution formula in the Maseve shareholders' agreement, as confirmed in the arbitration, PTM calculated that Wesizwe's ownership in Maseve would be further diluted to about 17.1% as a result of Africa Wide's failure to fund its R234.6-million share of a second approved cash call in February.

PTM explained that it expected its shareholding in Maseve, through its subsidiary PTM RSA, to rise to about 82.9% based on Africa Wide's two missed cash calls.

The company added that it was now able to move forward with plans to sell Africa Wide's diluted interest in Maseve to another black economic-empowerment partner and its final project finance plans for the ongoing mine build at the WBJV Project 1 platinum mine.

Africa Wide was also ordered to pay PTM RSA's costs, including the costs of senior counsel and arbitration, at the High Court level.

“The arbitration in South Africa was handled in a very professional manner and in accordance with established legal rules. We are pleased that a strong and reliable framework for the resolution of commercial disputes is available to companies such as ours who are operating in South Africa,” PTM CFO Frank Hallam said.

PTM RSA would now move forward to implement the arbitration award.