JOHANNESBURG (miningweekly.com) – “The Sword of Damocles has gone,” Sallies CEO Tom Dale told Mining Weekly Online as the news broke on Wednesday of the International Chamber of Commerce International Court of Arbitration meting out a far lesser penalty payment in the Honeywell case than might have been.

The international arbitration court ruled that Sallies and its fluorspar-mining subsidiary, Witkop, was obliged to pay roughly a fifth of what multinational Honeywell had claimed from the small South African mining company, which had refused to supply the giant at giveaway fluorspar prices.

The amount Honeywell had originally claimed was $6 847 305 plus interest and costs and its alternative claim was for $4 514 457 plus interest and costs.

But what the court ruled, was that it should receive $1 243 824 plus interest at 5 % a year since January 19, 2006, until full payment had been made.

Sallies said that interest to date was $200 000 and that it had accounted for its own expenses as they had been incurred.

‘We would have like to have won, but the Sword of Damocles has gone” Dale told Mining Weekly Online, adding that the decision had removed a long-standing business overhang.

The full downside exposure of R86-million has been cut 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 interest. The company is exploring various settlement options and remains in a sound liquidity position,” Dale added.

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

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 operation sold 60 251 dry metric tons (dmt) of fluorspar in the half-year period, which was up 15% on the 52 445 dmt previously. 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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