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One of Zambia's most notorious criminals has been working with Colin Bird of Xtract Resources to take over a Cooper mine in Kalengwa, Zambia. The local community oppose the deal. The mine belongs to another company. The questions that are being rasied now: was this all an elaborate insider dealing scam? 

The Kalengwa Copper Mine: making offers that can be refused

Kevin Coulter

Zambian Supreme Court Justices Phiri, Kaoma and Musonda:

“Our judgement of 25th March 2015 gave possession of the mine to the appellant and that cannot be questioned by anyone”

On 15th July 2019 Xtract Resources concluded and published a Memorandum of Agreement with Kalengwa Processing Copper Project Zambia. This report was duly published and appeared online that morning.

The CEO of Xtract Resources, a controversial mining executive called Colin Bird, was quoted on the release saying:

"I am pleased to have completed this processing arrangement which makes immediately available to us, relatively high-grade dump material for processing. We will also commence exploration operations to identify the possible extensions of the open pit ore both on strike and depth.”

The mining licence in question has been the subject of a long legal battle and no less than four Supreme Court Decisions. The persistent, if not obsessive, campaign to win the mine, which culminating in its occupation by young South African “investors”, has been waged by companies, Hetro Mining and Ore Limited and Lunga Minerals, which are controlled by Shawi Fawaz.

Fawaz  has faced charges of aggravated robbery and conspiracy to murder. Mr Fawaz is a partner in Kalengwa Processing Zambia. Perhaps that is why Mr Bird did not pursue this deal through the most obvious company with which he is associated, Jubliee Metals. Its CEO, the widely respected Leon Coetzer, would have had more sense and done more due diligence.

The MOA signed between the Colin Bird-Shawi Fawaz team included a 90-day due diligence period. At the time of the initial signature of the agreement, 12th July, and at the time of the release of the information on the 15th July,  rulings by the Supreme Court dating back to 7th March 2017 and 28th March 2017 and a renewed Mining Licence issued on 31 September 2017 for a three year period were in place establishing the ownership of the Kalengwa Licence by Euro Africa. These facts were known to Colin Bird the CEO of Xtract Resources. On 1st February 2018, Moxico Resources entered into a Joint Venture with Euro Africa. Moxico invested heavily in developing the mine. On 19 September 2018 the transfer of control of the Kalengwa Licence from Euro Africa to Moxico Resources plc was confirmed by Ministry of Mines and then endorsed by the Mining Licencing Committee and the Attorney General. Moxico Resources (Z) Ltd and Euro Africa are compliant with statutory obligations, taxes and mineral royalties. On 15 February, following $6m investment and with $20m raised from investors, Phase exploration was completed. All these facts were known on day one of the 90-day due diligence period. No amount of time passing is going to change these facts on the ground.

Everything that took place in the period from 30 March 2017 when the Supreme Court judgments in favour of Euro Africa were published and the 4th March 2019 conforms to the norms of good practice in mining licencing and exploration, in the conduct of public and listed companies and in the legal framework of Zambia’s anti-corruption legislation.

The sequence of events that begins on 4th March 2019 and continues to the present date, does not.

On the 4th March 2019 the Mining Licence Committee revoked without warning the Kalengwa Lience 8584-HQ-LEL. Legally under the Mines and Minerals Development Act 2015 Section 72 [2] the committee should have allowed Moxico Resources (Z) Ltd, 60 days to show cause as to why the licence should not be revoked.

The revoking of the licence had no technical basis and was in contempt of the Supreme Court Rulings of 7th and 27th March 2017.

It is was worth considering those rulings. They are in a publicly available document. During their 90 days of due diligence and indeed, at any time before the signing of the agreement, Colin Bird and Shawi Fawaz could have read the ruling. They could have asked their counsel to read the ruling and explain it to them if it was not clear to them.

Here are a few extracts. Follow the link above for the full ruling:

…in an judgement dated 28th January, 2010 the High Court dismissed the application for judicial review holding that there was no illegality, irrationality and unreasonableness and that the Director of Mines complied with the law since SML 142 was null and void ab initio because it was unlawfully granted in respect of an area covered by an already existing and valid licence PLLS 2011, this court ordered Hetro Mining to vacate Kalengwa mine; on 31st March, 2010 Hetro Mining commenced judicial review proceedings at the Ndola High Court and applied for an order of mandamus to compel the Minister to render a decision on its appeal. It also obtained an injunction restraining the appellant from going to Kalengwa mine and accessing the copper ore stockpile thereon. On 15th May, 2011, the Minister rendered his decision on the appeal and upheld the Director’s decision making the judicial review proceedings academic…our judgement of 25th March, 2015 gave possession of the mine to the appellant and that cannot be questioned by anyone

At anytime Mr Bird could have read the ruling and understood that his associate or perhaps boss, Mr Fawaz was not the kind of man to respect the rule of law. But Mr Bird saw an opportunity to make a quick killing. Mr Bird knew very well that was happening had no basis in law and would eventually unravel and be reversed. Why not make a little money along the way.

On 4th March 2019, the same day that the Mining Licence Committee suddenly and mysteriously revoked the existing licence without allowing the statutory period of appeal, Kalengwa Processing Zone Ltd applied to the Mining Cadastre Unit for the Kalengwa Licence. Kalengwa Processing Zone Ltd is almost entirely owned by KPZ International Ltd. KPZ International is registered offshore in the British Virgin Island. It controls 99% of KPZ in Zambia.

The application by this foreign company for the licence, should never have been accepted. It is in direct violation of the Mines and Minerals Development Act (General Regulations) SI No.7 Section 63 which stipulates that applications over an area in dispute shall not be accepted:

63.       On the commencement of these Regulations, where an area is subject to a conflict or overlap that could affect the mining activity area, that area –

            (a)        shall be blocked off until the resolution of the conflict; and

            (b)        an application over that area shall not be accepted.

On March 15th, Euro Africa lodged their appeal with the Minister of Mines. On 27th March that appeal was rejected and within 24 hours the KPZ application was validated by the Mining Cadastre Unit and approved by the Mining Licence Committee Chair. On April 2nd KPZ was granted the Kalengwa Licence by the Mining Licence Committee.

Between April and July, the Government of Zambia begin to take an interest in this suspicious sequence of events. Why is a UK led company being attacked in this way is the first question? The second question is who benefits in the long run if this operation succeeds. The answer is the same person who had tried and failed to use the courts to take control of the mine. If one branch of government lets you down, why not turn to another branch of government. But more troubling still is why would a CEO of a company like Xtract Resources, listed, get involved with someone like Fawaz, who they know is involved in criminal activity and they know has pursued multiple means to get what he wants? Rumours are flying around now that the government wants out of this mess and they are trying to find Fawaz an alternative licence. But the next chapter of the saga raises even more questions for Mr Bird, above and beyond his lack of judgement, failure to do due diligence on his partners and his reckless disregard for the rule of law and due process.

When Mr Bird welcomed the announcement of the agreement it was carried across the internet. Shares in Xtract responded well to begin with. It looked like a good deal

But then something rather odd happened.

As the share priced peaked, Xtract Resource share price hit a 12-month high on 21 July, shares began to be sold in ever larger numbers. The share price duly tanked.

The Share Price crashed on the 22 July, losing 23% Market Value.

The Questions that need to be answered:

  • Did the owners of the shares dumped know that their deal with KPZ would be ruled illegal by Zambian government?
  • Mr Bird knew there was a very serious dispute coupled with government investigations of Xtract and KPZ, but he did not inform current shareholders or those who bought. Why?
  • There was growing evidence that the Kalengwa licence was obtained illegally so did they decide to cut and run? Or was that always the plan?
  • Xtract announced their deal with KPZ to the stock market and because of the press announcement the share price of Xtract rose. Why did they not inform the public?
  • Did they sell shares to an uninformed and unsuspecting public in order to raise the price of the shares in order to sell soon after?
  • Did Xtract create content they knew to be false and illegal in order to inflate the share price?
  • They did so in full cooperation and assistance with a well-known Zambian criminal Shawi Fawaz. Why did they work with him?
  • Have the buyers of the Xtract shares been lied to by Colin Bird and by his associate, one of Zambia’s most notorious criminals,  Shawi Fawaz?

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