Nkwe Platinum Limited and Another v Genorah Resources (Pty) Ltd and Others

Nkwe Platinum Limited (Nkwe), a Bermuda-registered company, and Genorah Resources (Pty) Ltd (Genorah) held a 74% and 26% interest respectively in a mining right (the Garatouw mining right) granted under the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA). Nkwe entered into an amalgamation agreement with another Bermuda-registered company (Gold Mountains (Bermuda) Investment Limited) in accordance with the Companies Act of Bermuda. Zijin Mining company held 60.47% of Nkwe's share capital prior to amalgamation and 74% post-amalgamation, retaining controlling interest. Genorah contended that the amalgamation resulted in either: (a) a transfer of the mining right, or (b) a change in control of Nkwe without the Minister's approval as required by section 11 of the MPRDA, thereby rendering the transaction void, causing Nkwe's deregistration under section 56 of the MPRDA, and resulting in the lapsing of Nkwe's 74% share in the mining right. The high court accepted Genorah's contentions and granted declaratory orders including that Nkwe's shares in the mining right had lapsed. The parties subsequently concluded a settlement agreement before the Supreme Court of Appeal, with Genorah withdrawing its opposition to the appeal.

• Whether the conclusion of an amalgamation agreement between a Bermuda-registered company (holder of a mining right under the MPRDA) and another foreign company resulted in the cessation or deregistration of the right holder within the meaning of section 56 of the MPRDA
• Whether the amalgamation agreement resulted in the transfer or disposal of an interest in the mining right or a change in control of the right holder requiring ministerial consent under section 11 of the MPRDA
• Whether a judgment in rem may be set aside by settlement agreement on appeal and what standards apply to such settlements

The appeal was upheld with no order as to costs. The orders of the high court contained in paragraphs (i) to (vii) were set aside and replaced with an order dismissing the application with no order as to costs.

An amalgamation of companies under Bermuda company law does not constitute a deregistration within the meaning of section 56 of the MPRDA, as the amalgamating companies continue to exist within the amalgamated company. Where a controlling shareholder retains its controlling interest in a mining right holder both before and after an amalgamation (even if that percentage increases), there is no transfer or disposal of an interest in the mining right, nor a change in controlling interest requiring ministerial consent under section 11 of the MPRDA. The focus is on whether there has been a change in the identity of the party exercising control, not merely on the percentage held by that party. A judgment in rem may only be set aside by settlement agreement on appeal where the appellate court determines on the merits that the appeal justifies the setting aside of the judgment.

The Court observed that the purpose of section 11 of the MPRDA is to regulate changes in controlling interest in mining operations, and this purpose is not undermined where the same entity retains control before and after a corporate restructuring, even if the percentage of its shareholding increases. The Court also noted that the high court's error arose mainly from its incorrect interpretation of the amalgamation agreement and its effect on Nkwe's undivided share in the mining right under Bermuda company law.

This case clarifies important principles regarding the interaction between foreign company law (specifically Bermuda company law) and South African mining law under the MPRDA. It establishes that an amalgamation under foreign law does not necessarily constitute a transfer or disposal of mining rights or a change in control for purposes of sections 11 and 56 of the MPRDA where the controlling shareholder remains the same. The case also reaffirms the principle from Airports Company South Africa v Big Five Duty Free that judgments in rem may not be set aside merely by settlement agreement on appeal without the court's determination that the merits justify the setting aside. The judgment protects the continuity of mining rights where corporate restructuring occurs through amalgamation under foreign law without any actual change in controlling interest, thereby avoiding technical forfeitures of valuable mining rights based on form over substance.