Celamin Holdings NL (ASX Code CNL) is an ASX-listed company focused on the exploration and development of resource projects in North Africa; initially in Tunisia.
Celamin's immediate focus is the Chaketma Phosphate project held by a joint venture company Chaketma Phosphates SA (CPSA). CPSA was established in July 2014 with Celamin owning 51% and local company Tunisian Mining Services sarl (TMS) owning 49%.
Celamin is currently in dispute with TMS – see below.
Celamin alleges its Tunisian partner Tunisian Mining Services (TMS - Principal Taoufik Mansouri) has committed the following against Celamin:
Celamin is pursuing and planning a number of legal actions in relation to the share theft and debt recovery, and is concerned about the broader impact on Tunisia if the dispute is not quickly resolved.
Having been involved in Tunisia since 2009, phosphate developer Celamin Holdings NL now finds itself placed in a challenging situation by its locally-based partner TMS, whose actions, and delays in remedying the situation through the legal system, are likely to impact negatively on international perceptions of doing business in Tunisia.
Celamin's key focus is the world-class Chaketma Phosphate Project in the Kasserine region, central-western Tunisia. Initial exploration outlined a large high-grade Inferred Resource with potential for a substantial rock phosphate operation. Celamin and its local partner TMS, a private Tunisian mining services company, formed a joint venture company Chaketma Phosphates SA (CPSA) on a 51% Celamin / 49% TMS basis, which took over the management of the project in June 2014, and holds the Chaketma exploration permit.
In March 2015, and without warning, Celamin discovered that TMS had fraudulently transferred all of Celamin's shares in the joint venture company out of Celamin's name and into their own claiming that Celamin had defaulted on payment of a cash call. This is despite Celamin paying the required US$2m cash call before its due date, with official receipt from CPSA's bank. TMS has claimed the wrong Celamin subsidiary company paid the cash call as a basis for instructing the Director General of CPSA to declare the default. This is not only without legal merit, but Celamin has previously made payments to the joint venture company in exactly the same manner.
Understandably, Celamin is vigorously pursuing TMS in legal actions to reverse the transfer of shares and seek recourse against those involved in perpetuating the fraud.
Martin Broome, Chairman of Celamin Holdings commented: 'It is disappointing that our Tunisian partner, Taoufik Mansouri and his company Tunisian Mining Services, which has not contributed financially to the Chaketma project over the 5 years of its operation, should seek to profiteer on the back of an international investor such as ourselves. To date, Celamin has spent US$8.6m on the Chaketma project, as its exclusive funder, and TMS has spent nothing. More than 50% of that expenditure has been paid to TMS as the main service provider, using equipment that Celamin lent TMS money to purchase. Celamin is determined to recover its shareholding and will pursue its rights to the full extent of the law.'
BACKGROUND TO THE DISPUTE
Celamin Limited (a 100% subsidiary of Celamin Holdings NL) has been the sole funder of the Chaketma Phosphate Project providing, to December 2014, US$8.6 million of funding. Celamin's partner, TMS, has been the beneficiary of more than 50% of this project expenditure, as the largest service provider - using equipment bought with loans from Celamin - and had contributed no funds for project works as at that date.
On 21 October 2014, the Director General of the joint venture company (Chaketma Phosphate SA, or "CPSA"), without seeking the required approval from the CPSA Board, made a US$3.3M cash call directed to Celamin Limited to provide loan funds for the Chaketma feasibility study. CPSA already held an excess of funds above requirements at that time, and, in Celamin Limited's view, no cash call was justified.
Celamin Limited objected to this cash call and, after negotiations, TMS and Celamin Limited entered into an agreement dated 10 December 2014 to reduce the cash call to US$2M and extend the due date for payment until 15 January 2015, in the expectation of agreement being reached in the first quarter of 2015 on the choice of engineering contractor and the terms of their engagement for conducting the feasibility study for the Chaketma Phosphate Project.
Celamin Holdings deposited US$2M into CPSA's Tunisian bank account on behalf of Celamin Limited in payment of the cash call, receipt of which was confirmed by both CPSA's bank and the Director General of CPSA on 13 January 2015.
On 19 January 2015 the Director General of CPSA issued a notice of default to Celamin Limited for failure to pay the US$2M cash call by the due date ("alleged default"), rejecting payment by Celamin on Celamin Limited's behalf, despite this payment meeting Tunisian legal requirements and having been made in exactly the same manner as one of the two previous cash calls. Celamin Limited objected to the default notice and the action by the Director General and called a Board meeting scheduled for 9 March 2015 for the purpose of reversing these actions. A number of other outstanding issues were also scheduled to be addressed during that Board meeting in order to accelerate the rate of progress of the project.
This critical CPSA Board meeting was never held, as a consequence of the resignation of David Regan as Chairman of the CPSA board prior to the meeting, depriving Celamin of the quorum required.
Within 24 hours after receipt of the default notice, TMS indicated to Celamin that it would not be acting on that notice and the Director General of CPSA and TMS continued working with Celamin in progressing the Chaketma Phosphate Project.
On 3 March 2015, the Company was advised by the then Chairman of CPSA, Mr David Regan, that he had received notice from the Director General of CPSA to the effect that Celamin Limited's shares in CPSA had been transferred to TMS on 13 February 2015. Celamin requested a voluntary trading halt of its shares on the ASX on 4 March 2015. The shares remain suspended from trading on the ASX.
Following initial legal investigations, the Company understands that the Director General (without Celamin's knowledge and without the required authority from the CPSA Board) had transferred Celamin Limited's shares to TMS on the basis of the alleged default.
Celamin disputes the existence of any default on the part of Celamin Limited and is of the view that Celamin Limited's shares in CPSA have been transferred without any legal basis.
The US$2M deposited by Celamin for the cash call, which remained in a Tunisian bank account in CPSA's name for a period of over three months, was received back into Celamin's bank account in Australia on 27 April 2015, transferred from the Tunisian bank of CPSA at the instigation of the DG of CPSA after having declared the "default". Celamin received no communications from TMS or CPSA in relation to the transferred funds.
Previous cash calls totalling US$1.7m were provided as loan funds from Celamin Limited to CPSA prior to 31 December 2014, for the purpose of funding the Chaketma Phosphate Project feasibility study. As at 31 January 2015 US$1.4m of these loan funds remained in CPSA's Tunisian bank account. Celamin understands the loan funds can be recalled from CPSA regardless of the outcome of the legal dispute.
Despite not having contributed any funds for the operation of the Chaketma project, TMS has always pushed for Celamin to maintain a large cash balance in CPSA. This is at odds with TMS' own policy of only having paid the minimum contribution for the initial establishment of the JV company and having insisted on not contributing any TMS funds to the operation of the project before a minimum of 70% of the budgeted cost of the project had already been spent - an event that was expected to happen in the months after the theft of Celamin's CPSA shares.
A long-standing debt of A$160,000 - unrelated to the share theft - that TMS has already formally acknowledged that it owes to Celamin, continues to remain unpaid, and is now the subject of separate legal action to recover it.