re: Ann: Company Update - Matter Settled - Sh... I think the...

re: Ann: Company Update - Matter Settled - Sh... I think the directors did the most sensible thing by settling out-of-court, and then attempting to recover funds from the original vendors.

If SRR persisted with the case in the Namibian courts, it could possibly have been suspended from trading for a year or more.

My gut feeling is that SRR and the original vendors will reach something like a 50:50 agreement to pay the plaintiff (which is probably harsh on SRR - but let's see).

This means SRR may pay $2.25 million dollars (in total eventually), though we would expect SRR to try and recover the full cost of $4.5 million (if possible).

I expect that it might not be until SRR are in production at Otjo that the final cost to SRR can be calculated, because a part of the payment to the plaintiff was dependent upon production.

Either way, the payments and recoveries should show up in the annual financial report (in one form or another).

Interesting to see that SRR claim they did not know of the legal case against them because the documents were served at the wrong address.

This happened to a company I ran while overseas, which caused us a year of problems, and in our case, it was not even against our company, it was for another company with the same name. The legal clerk had used company names instead of company numbers to inform the courts. Not only did they have the wrong company, they also had the wrong address for the wrong company.

That a simple mistake by a young novice legal clerk in the UK could tie up multiple international companies, multiple law firms, and the courts for over a year, still staggers me to this day.

So I can understand the SRR position, and frustration (no doubt).

So why was this not picked up during due diligence?

To an extent, I think the project is so good, that SRR just wanted it, and so due diligence may not have been as thorough as possible. It is also possible that the original vendors did not tell SRR the whole story. And there are always time constraints with due diligence.

One thing I am sure of, and that is the government of Namibia, and the local communities and workers are much happier having SRR in charge of the project than the original owners. Under the original owners there was exploitation and union actions and court battles (as far as I know).

The directors have done their best to get this resolved and get us back on the boards.

The share price may suffer a little in the near future, though not much I expect, as long as the European crisis does not worsen.

SRR's projects, all three of them, look exceptionally good, and being backed so heavily by Atlas Iron makes this a good investment case IMHO.

And it sounds as if we can look forward to some very positive announcements in the near future.

Gw

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