In response to JSE- and NYSE-listed precious metals miner Sibanye-Stillwater backing out of its acquisition of the Santa Rita nickel and Serrote copper mines, in Brazil, the seller Appian Capital has served Sibanye with a notice of claim for what it says is the unlawful failure to close the acquisition.

The acquisition would have involved Sibanye acquiring Atlantic Nickel and Mineracao Vale Verder, the operating companies of the mines, for $1-billion and a 5% net smelter royalty to Appian over future production.

While Sibanye cited its reason for the termination of the acquisition as being a geotechnical event at Santa Rita having a material and adverse impact on its financial conditions, properties, assets, liabilities and operations of the mine, Appian says the instability had minimal impact on the mine and these types of occurrences are expected in mature mining operations.

Appian elaborates that the geotechnical instability – which was a crack that formed a wedge-shaped rock mass – affected less than 1% of the total surface area of the openpit mine and points out that daily ore mined continued to exceed levels of daily ore mined before the event.

The mining investment firm adds that there is no impact on the openpit mine, nor any expected loss of ore within the openpit reserve.

Besides, Appian argues, the area where the event occurred will be fully mined out during the second half of this year, at which point the instability will no longer exist.

Appian notes this in response to Sibanye alleging that the instability reduces a six-year mine life by two to three years.

“Sibanye’s actions have exaggerated the effect of the geotechnical instability and have materially damaged the market perception of Atlantic Nickel and Appian,” the firm states.

It says Sibanye purports to rely on alleged adverse impacts of this geotechnical instability to terminate the sale and purchase agreements, adding that Sibanye intentionally chose to breach its obligations for commercial reasons alone.

“Appian intends to rigorously enforce its legal rights and pursue Sibanye for all damages and losses incurred,” the firm concludes.