Stockpiles at the Rukwa mine
Aim-listed Shuka Minerals, previously known as Edenville Energy, has signed a definitive settlement agreement with Upendo Group, which holds a historic residual 10% interest in the Rukwa coal mining licence, in Tanzania.
The dispute with Upendo, regarding the interpretation of the “residual” interest entitlements, has been ongoing for many years.
Upendo had obtained a judgment for $110 000, with interest and costs and $108 000 was previously lodged by Shuka with the court in Tanzania, as announced in June last year.
Upendo is also seeking further amounts, including a potential claim for 10% of all gross sales revenue from Rukwa, both historically and going forward.
Shuka says the dispute has been vigorously defended and, where necessary or appropriate, appealed by the company in the Tanzanian courts.
“It has been taking time, management resources and causing reputational and relationship damage to the company in-country. As a result, the board believes a settlement drawing a line under the dispute is the most appropriate route forward,” Shuka emphasises in a statement.
The settlement involves the immediate payment to Upendo Group of $110 000, the immediate settlement of all proceedings and a waiver of all or any related claims by all parties howsoever arising.
Shuka will use the funds already lodged in court to meet the majority of the settlement costs.
In addition, Upendo will have a right to nominate a director to be appointed to the local Rukwa operating subsidiary, which currently has five directors nominated by Shuka, and Upendo will earn a royalty of $1.95/t of coal sold from Rukwa.
Upendo has agreed to communicate the settlement to all the relevant authorities in Tanzania, Shuka informs.
The settlement agreement provides that the royalty described above and the right to nominate a board member to the local company are the only rights attaching to the Upendo residual interest in the licence, it adds.
“We are very pleased to have achieved the amicable settlement with Upendo, as it enables us to review and determine the strategic direction of our coal mining interests at Rukwa, without the prospect of an overhanging legacy dispute. This clears the way for us to be more decisive and cohesive in our future decisions,” says Shuka CEO Noel Lyons.