Logo of Phnom Penh Post newspaper Phnom Penh Post - Okvau resource’s value at centre of dispute

Okvau resource’s value at centre of dispute

Okvau resource’s value at centre of dispute

THE value of a Mondulkiri gold resource and an alleged breach of contract are at the heart of a dispute between Australian miner OZ Minerals and its former local partner, Shin Ha Mining Co Ltd.

The two companies were part of a joint venture in the Mondulkiri Okvau-Ochhung exploration areas in 2008 and 2009 before OZ Minerals bought out Shin Ha’s 20 percent share of the project for US$4.6 million, reports have said.

Shin Ha is now seeking compensation through Australia’s legal system, claiming OZ Minerals hid the true value of the mine prior to the buyout, according to reports.

“The fact that OZ Minerals kept certain technical information away from Shin Ha certainly destroyed any chance for Shin Ha to grow in its own right,” said Nicholas Steel, a 10 percent stakeholder in Shin Ha, yesterday by phone. OZ Minerals had “advanced independent studies” that showed as many as 857,000 ounces of contained gold, using a one parts per million cutoff, were in the mine in September 2008, Steel said in a previous email.

That was more than a year before the eventual sale of Shin Ha’s stake in the mine in October 2009, he said. In March 2010, OZ announced it had identified 605,000 ounces of gold resources at the Okvau site.

Steel, a former general manager for Southern Gold in Cambodia, has claimed that OZ’s alleged refusal to share the information was a breach of the company’s obligations to the joint venture with Shin Ha.

OZ Minerals spokeswoman Natalie Worley responded to the claims, saying the firm “works to international business standards wherever it operates.”

“In this case, the company complied with the terms of the joint venture at all times, and commercial terms were aligned with those used in the mining industry globally,” she said.

KB Thuraisingham, a legal advisor to Shin Ha, said the alleged actions of OZ Minerals showed a “failure to perform by their fiduciary duties in the [joint venture] statement.”

“We believe we have a case. Not just a case of value, but more of legal obligations that were breached,” he said.

Thuraisingham admitted Shin Ha initially approached OZ – then operating under the name Oxiana – about a potential sale, but only because Oxiana was struggling with financial problems at the time. Oxiana’s inability to assuage Shin Ha’s investors about the Australian firm’s ability to continue its operations in Okvau prompted the sale. “They were forced by the circumstances,” he said of Shin Ha.

The Okvau site presently is being valued, and that conciliation between the two companies will commence once it is complete, he said.

Worley did not respond directly to questions from The Post as to whether or not the price offered for Shin Ha was fair, though Steel has said Shin Ha’s 20 percent stake in the resource would have been worth $180 million at today’s gold prices. Beyond the value of the resource itself, Steel said Shin Ha was given “no opportunity to judge ourselves” whether or not the sale made sense for the company’s shareholders.

The Okvau mine, and perhaps some additional assets, might have allowed Shin Ha to list on any number of stock exchanges, thereby spurring significant growth of the company and delivering greater returns for shareholders, he said.

“How can you put a value on that?” he said.

MOST VIEWED

  • New US bill ‘is a violation of Cambodian independence’

    After a US congressmen introduced bipartisan legislation that will enact sanctions on Cambodian officials responsible for “undermining democracy” in the Kingdom, government officials and the ruling Cambodian People’s Party on Sunday said they regarded the potential action as the “violation of independence and sovereignty

  • Long way to go before Cambodia gets a ‘smart city’

    Phnom Penh, Siem Reap and Battambang will struggle to attain smart city status without adopting far reaching master plans, according to officials tasked with implementing the program. The brainchild of the Association of Southeast Asian Nations (Asean), the smart city program seeks to link up

  • Japan bank buys major stake in ANZ Royal Bank

    Japan's largest bank acquired more than half of ANZ’s shares in Cambodia on Thursday, according to a statement from Kith Meng’s Royal Group. Japan's JTrust Bank, announced that they had acquired a 55% of stake in ANZ Royal Bank. According to a Royal Group

  • Ministry’s plan for net sparks fears

    The government has ordered all domestic and international internet traffic in the Kingdom to pass through a Data Management Centre (DMC) that has been newly created by the state-owned Telecom Cambodia, in a move some have claimed is an attempt to censor government critics. Spokesman