- Cougar Metals (CGM) has reported an update regarding to a breach of settlement agreement with DNI Metals
- The parties have been going back and forth since September last year when a settlement was made outlining DNI paying Cougar a sum of CAD $2.5 million over eight quarterly instalments
- In June this year however, DNI failed to repay its first instalment
- As a result, DNI was required to pay an additional CAD $250,000 by July 25
- Instead of paying, DNI claimed Cougar breached the agreement by making disparaging comments towards a DNI shareholder
- Cougar denied breaching this clause and requested proof however DNI refused
- DNI still has a remaining settlement amount of $2.25 million which is due
- Cougar Metals is currently suspended from official quotation and has been since October 1
Cougar Metals (CGM) has reported an update regarding to a breach of settlement agreement with DNI Metals.
In September 2018, the company announced reaching a settlement of the arbitration with DNI concerning litigation proceedings over DNI’s Vohitsara Graphite Project in Madagascar.
The settlement outlined DNI paying Cougar CAD $2.5 million (A$2.7 million) over eight quarterly instalments.
Additional terms included a payment of an accelerated amount of up to CAD $1 million (A$1.1 million) in the event of a sale of Vohitsara.
It seems both parties settled all matters between them until in June of this year when Cougar announced DNI failed to repay the first payment instalment, however, DNI rectified this within 30 days.
The company pursued this default stating DNI would need to pay an extra CAD $250,000 (A$276,000) or pay the full amount by July 25.
Unfortunately it was not smooth sailing after this, as DNI served Cougar with a Notice of Breach, in relation to the settlement, on July 26.
DNI claimed that Cougar breached the agreement citing a clause stating that neither party can make any “disparaging, negative or defamatory statements, remarks or communications of any kind to anyone in any public or online forum, or in any manner whereby such statements, remarks or communications are or may be published…”
Cougar denied breaching this clause and requested proof – specifically the public nature of the claimed comments.
DNI however, refused to provide this due to preferring to “leave the legal arguments about the breadth of the non-disparagement obligation to the lawyers.”
Regardless, the settlement agreement provided for the suspension of payments to Cougar in the case of an alleged breach. Interestingly though, DNI’s allegation was made less than two days prior to its payment deadline of $250,000.
In mid-November Cougar set up a hearing to challenge the legitimacy of the breach and an arbitration award delivered on December 2.
The arbitration award found Cougar did, in fact, breach the settlement agreement by making “disparaging” remarks to a DNI shareholder regarding its management but the arbitrator found DNI hadn’t proven or suffered any damages.
DNI was asked to pay Cougar CAD $4250 (A$4706), and the award also directed the outstanding payment of $250,000 from DNI to Cougar was due and payable on December 4.
As per its Monday announcement, DNI claims all payments are suspended to a second notice of default that it issued in early November.
As it stands however, DNI failed to initiate arbitration to seek relief and determine damages regarding alleged breaches by Cougar.
As it failed to make its December 4 payment, the full remaining settlement amount of $2.25 million became due and payable.
Failing a new agreement being reached with DNI’s current management, Cougar will enforce the debt in the courts of Ontario and Madagascar.
Cougar Metals is currently suspended from official quotation and has been since October 1.