Adastra launches U.S. suit against Endiama

Previously stymied by years of civil war in Angola, Adastra Minerals (AMZ-T) is now turning to courts in the United States to try persuade state-owned Empresa Nacional de Diamantes de Angola (Endiama) to live up to contractual obligations it says have been repudiated.

In 2002, Adastra’s subsidiary IDAS Resources and Endiama inked deals for diamond exploration and exploitation in the Luremo area of Angola. In October 2001, Endiama was awarded two licences covering nearly 3,000 sq. km along a 50-km stretch of the Cuango River. The licences were to be exercised through a joint venture between the two companies.

“Despite agreed detailed commercial terms and fully drafted documentation, we have been totally frustrated in our attempts to progress matters further and Endiama has made it clear that it has repudiated its contractual obligations,” says Adastra chief President Tim Read. “This has left IDAS with no choice but to seek legal redress. We have been advised that we have a very strong case,”

“This is a disappointing situation in respect of Adastra’s rights; however it will not be allowed to divert the company from its principal focus of bringing the Kolwezi tailings project into production,” adds Read.

Adastra says that under the deals inked in 2002, IDAS holds a 51% interest in the two licences in the provinces of Lunda Norte and Malange. Under the terms of the agreements signed un August and December 2002, IDAS will have a 51% stake in the licences, while Endiama, the Angolan state diamond company, will hold 38%. Twins, a local company, will have the remaining 11%. IDAS’s percentage will be reduced to 49%, once all shareholder loans to the project have been repaid, but will retain overall voting and management control of the joint venture.

The Cuango floodplain licence runs along the Cuango north to the border with the Democratic Republic of Congo, and is valid for exploration of both alluvial and primary sources. The 300-sq.-km Camutue licence is contiguous to the south, and covers areas of historic production.