Mogale Alloys (Pty) Ltd v Nuco Chrome Boputhatswana (Pty) Ltd 2011 (6) SA 96 (GSJ)

Abstract

Section 11(1) of the Minerals and Petroleum Resources Development Act 28 of 2002 (hereafter “MPRDA”) contains a restraint against the alienation or transfer of prospecting rights, an undivided share in such rights or a controlling interest in a company or close corporation holding such rights, unless the approval of the Minister of Mineral Resources is obtained. The restraint also applies to mining rights to minerals, exploration and production rights to petroleum (ss 11(1) and 69(2) MPRDA). As the Mogale decision dealt with prospecting rights, our discussion shall focus on prospecting rights but the principles are of course also applicable to the other rights. The Mogale decision is significant because it gives some indication of what is meant by a “controlling interest” in terms of section 11(1) of the MPRDA. It also illustrates how important it is to meticulously execute conditions in contracts, and to understand the consequences of the non-fulfilment of suspensive conditions if these consequences are harsh and unfair but stipulated in the agreement. In effect, the plaintiff in this case paid R3 million for shares, but was unsuccessful in enforcing the agreement through an order for specific performance because two suspensive conditions were not fulfilled, and the contract contained a clause preventing the plaintiff reclaiming the R3 million. In short, the plaintiff paid R3 million but never became a shareholder of the company and could not recover the payment contractually.