Red Rock has a diverse portfolio of assets around the world, and plenty of experience operating in Africa
() has entered into two deed agreements with regard to Australian company VEC Resources Ltd, which is in administration.
The purpose of the deeds, taken together, is the commencement of arbitration proceedings in Paris, the continuation of an existing injunction in the British Virgin Islands (BVI), and the creation of an ability for Red Rock to engage counter-parties in discussions regarding a mediated outcome, with the support of creditors.
VEC acquired a 60% stake in the Adidi-Kanga Gold Project in the Democratic Republic of Congo in 2017. But since December 31, 2018, the VEC stock has, except for two brief periods, been suspended from trading on the ASX as a result of issues connected with the acquisition.
On September 21, 2020, the Congolese partner of VEC served a notification of breach of conditions on VEC, which VEC disputes. On October 5, 2020, that partner’s two representatives on the VEC board resigned.
On November 23, 2020, VEC obtained in the BVI the extension of an injunction preventing the escrow agent from transferring to the Congolese partner the shares held by VEC in a majority interest in the 3.2mln ounce Adidi-Kanga gold project, pending further order of the court.
“Our familiarity with VEC, as well as its assets in the DRC, its principal lenders, its local partner, and its local agent, mean that we are well-positioned to play a constructive role and look forward to seeing the situation develop,” said Red Rock chairman Andrew Bell in a statement.
“Should arbitration and litigation have to continue, we have experience and have shown resolve in pursuing disputes in sub-Saharan Africa to a necessary conclusion and are, we believe, good partners.”
The obligation on Red Rock is US$90,000.
Red Rock will gain the right for two years to acquire the loans of the secured creditors of VEC, MEF I and Riverfort Global Opportunities PCC Ltd, for a consideration equal to their net book cost at the time of such acquisition, with half the consideration to be paid in Red Rock shares at the then current price.
The loans amount to approximately US$5.2mln, which may be reduced by any successful claims by the secured lenders.