High Court Ejects Chinese Miners from Gwampa Mining Agreement

Zimbabwe’s High Court has ruled that shares issued to Chinese firm Ming Chang Sino Africa Mining in Gwampa Mining were unlawful (image source)

HARARE — The High Court of Zimbabwe has ruled that shares issued to Chinese mining firm Ming Chang Sino Africa Mining Investment in Gwampa Mining were unlawfully allotted, effectively ejecting the company and its associates from a disputed mining investment agreement.

The judgment, delivered by Justice Bongani Ndhlovu of the Commercial Division, followed an application by Gwampa Mining seeking rectification of its share register. Gwampa argued that shares had been issued and allotted in breach of agreed conditions and without compliance with corporate governance requirements. The respondents cited in the matter were DGL Investment Number 5 (Pvt) Ltd, Eagle Italian Shoes, Ming Chang Sino Africa Investment, Fuel Africa, Wang Ke, and the Chief Registrar of Companies and Other Business Entities.

Evidence before the court showed that Gwampa Mining, incorporated in 2009, entered into an investment agreement in April 2017 with Eagle Italian Shoes, Ming Chang Sino Africa Investment and Fuel Africa to jointly mine claims owned by DGL Investment Number 5. The agreement required the fulfillment of strict conditions precedent before any share allotment, including the execution of a written shareholders’ agreement, the assumption of a US$4.3 million debt, and agreed royalty payments to Gwampa Mining.

Justice Ndhlovu found that these conditions were never met. Shares were instead issued by DGL Investment Number 5 rather than Gwampa Mining, without a shareholders’ agreement in place, and without proof of the required capital contributions. The court also found that unauthorised additional shares were allotted, including shares issued to Wang Ke, who was not a party to the original investment agreement.

Gwampa Mining argued that the failure to meet conditions precedent rendered the agreement legally ineffective and invalidated any rights claimed by the investors. While Ming Chang Sino Africa Investment contended that it had settled the US$4.3 million debt and advanced a further US$1.2 million loan, the court rejected the claim due to lack of documentary proof. “The 3rd respondent has not provided proof of payments and relied on bare denials,” Justice Ndhlovu said, adding that there was no evidence of royalty payments or a properly executed shareholders’ agreement.

The court ruled that Ming Chang Sino Africa Investment, Fuel Africa and Wang Ke were unlawfully allotted shares and ordered that their names be removed from DGL Investment Number 5’s share register. Justice Ndhlovu further directed the Registrar of Companies to effect the rectification and cancelled the disputed shares. The respondents were ordered to pay the costs of the application.

Legal analysts say the ruling reinforces the importance of strict compliance with corporate governance rules, particularly in high-value mining investments. For Gwampa Mining, the decision restores control over its shareholding structure and sets a strong precedent for enforcing conditions precedent in Zimbabwe’s mining sector.