Iron Ore in Peru - a complex project
“Iron ore is an extremely valuable commodity and is much sought after by the emerging economies. We usually think of Australia as the source of iron ore and as the province of the major mining houses. However, as this transaction proved, Australian mid-tier companies with entrepreneurial spirit, together with their lawyers, can also play in this space and deal with language, community and cultural differences in an accommodating and professional manner.”
Cornwall Stodart
Our Client
Our client is an unlisted public company established to invest
in an iron ore project in Peru. The client's entrée into this
investment was via an arrangement with a Peruvian based family
which, in turn, was in partnership with other interests including
an Australian listed public company.
Our client's board of directors consists of persons experienced
in mining, finance and accounting and in dealing with indigenous
communities which, as in Australia, are an important community in
Peru.
Our client's shareholders are a diverse group of private
investors.
Their Ambition
Our client's managing director was referred to us by a leading
Victorian Queens Counsel and former member of the Victorian
Parliament because of our abilities in corporate advisory and
energy and resources transactions.
Our client's goal was to reach an 'investment agreement' with
the Peruvian based family that would see them working in
partnership to bring about the best result from the project -
either a producing mine or a trade
sale.
Enhancing their Success
After difficult but friendly negotiations, the 'investment
agreement' was signed and its terms completed. As the project was
at the exploration stage, our client and its Peruvian partners have
required ongoing advice regarding the interpretation of the
shareholders' agreement governing the project and the management
and resolution of disputes that arose between our client's Peruvian
partners and their other shareholders.
These disputes were dealt with by the Peruvian courts, which
added another dimension to the advice our client required. All
parties have settled their differences and the project is back on
track.
Behind the Headlines
The challenges we faced, apart from coping with international
time zones, included coming to grips with language and cultural
barriers. These factors had a major impact on how and at what pace
the 'investment agreement' was negotiated. The breakthrough came
when our client's managing director and the lead partner on the
transaction, travelled to Lima, Peru and negotiated face to face
with members of the Peruvian family for one week. The ALFA firm
located in Lima assisted us greatly through their knowledge of the
Peruvian family, Spanish and local culture.