PERTH (miningweekly.com) – ASX-listed Lindian Resources has launched criminal proceedings against Rift Valley Resources and geologist Michael Saner in South Africa, claiming that the company was defrauded.

Lindian on Friday told shareholders that the company had been granted an injunction by the High Court of Malawi, preventing Rift Valley and Sanar from dealing with the shares in the Kangankunde rare earths project, and in Rift Valley shares.

The injunction comes after Rift Valley and Saner wrote to Lindian to cancel an existing earn-in agreement over the Kangankunde agreement, claiming changed circumstances in Malawi following the execution of the original agreement, which they said made the agreement unenforceable.

Rift Valley and Saner instead offered a new agreement for the sale of the Kangankunde project, which Lindian said was on entirely different terms, and would see the full sale of the project for $70-million as well as a 5% revenue royalty to the Rift Valley shareholders.

The original agreement would have seen Lindian earn an initial 30% interest in the project by paying Rift Valley $500 000 for exploration and development work at the project, and $500 000 to Saner.

The Stage 2 earn in, which would have taken Lindian’s share in the project to 75%, would have required a further $2.5-million cash payment to Saner, or the issue of $2.5-million fully paid ordinary shares in Lindian, with Lindian also holding the responsibility to fully fund the entire project, with the 25% interest in Rift Valley held by Saner, to be free-carried at all times.

During the 120-day exclusivity period, for which Lindian paid $100 000, Lindian assisted with the execution of a consent order between the Malawi government and Saner, providing for the issue of a new exploration licence over all the ground comprising the Kangankunde project.

The exploration licence was issued under the current Malawi regulations, and is for an initial three-year period, renewable twice for periods of two years each.

Lindian noted that the consent order also provided for the Malawi Ministry of Natural Resource and Environmental Affairs to support the conversion of the exploration licence into a mining licence, as well as assistance with any financing parties introduced to develop the project.

It was only after the consent order was granted that Rift Valley and Saner approached Lindian about terminating the existing agreement over Kangankunde.

Lindian said on Friday that while the current situation was frustrating, the company was "extremely confident" of its legal position, and will continue to ensure that its contractual position was protected while it pursued Saner and Rift Valley for "appropriate remedies", including the specific performance of the original agreement, or financial damages.