Aberdeen International Incorporated v Simmer and Jack Mines Ltd

Aberdeen International Incorporated, a Canadian financing company, and Simmer and Jack Mines Ltd, a South African gold mining company, concluded a loan agreement in March 2006, later amended in November 2006. Clause 2.11 of the amended agreement granted Aberdeen a right of first refusal for the ‘financing’ of all Simmer’s properties until final repayment of the loan. After the agreement, Simmer raised capital on several occasions by issuing shares for cash. In 2007, Simmer undertook a private share placement without offering Aberdeen a right of first refusal. Aberdeen alleged that this constituted a breach of clause 2.11, contending that ‘financing’ included equity financing. Simmer argued that the clause referred only to loan financing.

The appeal was dismissed with costs, including the costs of two counsel.

The case is significant for clarifying the South African approach to contractual interpretation, particularly the interpretation of ambiguous terms with reference to context and factual matrix. It reinforces that commercial context, regulatory environment, and practical consequences are central to interpretation, and confirms that ‘financing’ in a loan agreement will not lightly be extended to include equity financing.