PERTH (miningweekly.com) – ASX-listed Sierra Rutile has raised concerns regarding a dispute with Chinese company Transcend International Resources.
Sierra Rutile’s operating subsidiary Sierra Rutile Limited (SRL), has been involved in legal proceedings in Sierra Leone with Transcend, under which Transcend alleged that SRL had handled its equipment illegally or wrongfully and damaged the equipment.
In 2021, the High Court of Sierra Leone delivered judgment in favour of Transcend for approximately $3.2-million, plus interest at the rate of 25% a year until full payment. SRL appealed against the judgment and the appeal is still to be heard.
The amount in issue is now $4.3-million inclusive of interest and costs of which $3.2-million was provided in the 2021 accounts.
Sierra Rutile told shareholders on Tuesday that the High Court had already allowed partial enforcement of the judgment and an amount of $1.6-million, which was held in a joint account as security pending the outcome of the appeal, has previously been paid to Transcend. More recently, by way of further enforcement of the judgment, the High Court has granted a garnishee order over SRL’s bank accounts in Sierra Leone.
The effect of this is to freeze those accounts and allow funds in SRL’s accounts to be released to Transcend to meet the balance of the judgment debt of $2.7-million.
SRL has made numerous representations to the High Court and to the government of Sierra Leone to avoid the garnishee order being made until such time as the appeal has been heard, however, Sierra Rutile told shareholders that these representations appear to have been unsuccessful.
As Transcend is a Chinese entity with no substantial assets in Sierra Leone, recovery of any funds paid to Transcend if the appeal is ultimately successful may prove very difficult, although SRL will take all reasonable steps to recover the amount in that event.
Sierra Rutile told shareholders that its board would consider the implications of these developments and would keep shareholders informed of material developments.