Initiation of Arbitration

RNS Number : 5672A

Berkeley Resources Limited

02 April 2012

 



2 April 2012

Berkeley Initiates International Arbitration against Enusa for an amount exceeding US$200 million

Pursuant to the announcement of the 1st of March 2012, Berkeley Resources Ltd ('Berkeley Resources' or the 'Company') advises that the Company's wholly-owned subsidiary, Berkeley Minera España ('BME'), has initiated International Arbitration proceedings against Enusa Industrias Avanzadas, S.A ("Enusa"), through the Paris-based International Court of Arbitration of the International Chamber of Commerce.

It is the opinion of Berkeley, and its legal advisors in Spain, that Enusa has, on a number of occasions, unjustifiably refused to honour its contractual obligations under the Co-operation Agreement of 29 January, 2009.  In particular, it failed to incorporate the Joint Venture company 'Newco' (90% BME, 10% Enusa) on the 29th February 2012, resulting in a clear breach of that Agreement.

In addition to the complete fulfilment of BME's obligations, BME has also provided Enusa with numerous opportunities to achieve a satisfactory outcome and to avoid arbitration.  These included the granting of multiple extensions to postpone the formation of Newco, and offering alternative, viable options to progress the project.

The Co-operation Agreement establishes that the consequences of such an event of material breach shall be that Enusa will return to BME the non-amortised value of all its investments made and expenses incurred.  This includes (a) five million euro (€5,000,000) to acquire the data and (b) any evidenced expenses in which it may have incurred to carry out the Feasibility Study, whether or not it has been completed. Enusa will also compensate BME for any damages caused, including any reasonable loss of profits.

BME is claiming compensation for a total  amount estimated to be in excess of US$200M, for the damages and losses caused by Enusa's breach of the Co-operation Agreement.

Berkeley considers that it has a strong case.  This assessment is based on a number of factors, including: an independent technical review (undertaken by a leading Spanish-based international engineering company) of the Restricted Feasibility Study's Conceptual Basic Engineering Report; an audit of the project economics (undertaken by Spanish-based auditors specialising in litigation); and advice from BME's international legal advisors in Spain, who have considerable experience in successful commercial arbitration actions within the country.

BME has informed Enusa that the Company is prepared to collaborate at any time with the aim of achieving an amicable solution, independent of any arbitration proceedings.

Berkeley Managing Director, Brendan James stated "Delays on the joint venture project have been disappointing, and could not be allowed to continue indefinitely. Arbitration is not the preferred outcome for Berkeley, or for the region of Ciudad Rodrigo, but one we are forced to undertake to defend our rights, and to achieve a resolution.  It is important to note that this action will not distract the management team from delivering upon Berkeley's 100%-owned Salamanca I project.  Being completely independent of the Joint Venture Project, the Salamanca I project remains on-schedule, and we expect to initiate construction in 2013".

For further information, visit the Company's web site at www.berkeleyresources.com.au or contact:

Berkeley Resources	Brendan James (MD)	[phone]
RBC Capital Markets	Martin Eales / Dan Conti	[phone]
Tavistock Communications	Emily Fenton / Ed Portman	[phone]

 

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