Astor Management AG (formerly known as MRI Holding AG) and Another v Atalaya Mining Plc (formerly known as Emed Mining Public Ltd) and Others

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeMr Justice Leggatt
Judgment Date06 Mar 2017
Neutral Citation[2017] EWHC 425 (Comm)
Docket NumberCase No: CL-2015-000790

[2017] EWHC 425 (Comm)




Royal Courts of Justice

+Strand, London, WC2A 2LL


The Honourable Mr Justice Leggatt

Case No: CL-2015-000790

(1) Astor Management AG (formerly known as MRI Holding AG)
(2) Astor Resources AG (formerly known as MRI Resources AG)
(1) Atalaya Mining Plc (formerly known as Emed Mining Public Limited)
(2) Atalaya Riotinto Minera SL (formerly known as Emed Tartessus SL)
(3) EMED Holdings (UK) Limited
(4) EMED Marketing Limited

Stephen Smith QC and Christopher Lloyd (instructed by Hogan Lovells International LLP) for the Claimants

Simon Browne-Wilkinson QC and Alexander Milner (instructed by Fieldfisher LLP) for the Defendants

Hearing dates: 30 January 2 February 2017

Approved Judgment





The parties


Background to the Master Agreement


The Master Agreement


The March 2009 amendment


The November 2009 amendment


Subsequent events


Astor's claims


The proceedings


The issues


(1) Did the requirement for a Senior Debt Facility fall away?


(2) Were the EMED Group loans a Senior Debt Facility?


(3) The obligation to use all Reasonable Endeavours


(a) Is clause 6(f) enforceable?


(b) Did the obligation end on 31 December 2010?


(c) Was there a breach of clause 6(f)?


(4) Alleged breach of implied duty of good faith


(5) Must any excess cash be paid to Astor?




Mr Justice Leggatt



The mining of copper ore at what is now known as the Rio Tinto Project in southern Spain dates back at least 3,000 years. In ancient times the Phoenicians and the Romans worked the mine. In modern times, British and American companies and a Spanish workers' cooperative have done so. The claimants and the defendants in these proceedings are the present parties to an agreement relating to ownership and exploitation of the project. This agreement (the "Master Agreement") was originally made on 30 September 2008, although it has since been re-stated and novated. Under the Master Agreement the defendants bought out the claimants' interest in the project. Payment of most of the consideration was deferred. It is the claimants' case that, since mining restarted in July 2015, payment of the "Deferred Consideration" (which is payable in instalments over six years and will amount in total to at least €43.8m) has been triggered; alternatively, if it has not been triggered, this is because the defendants were in breach of the agreement. The defendants' case is that there was no breach of the agreement, payment of the Deferred Consideration has not been triggered and, in the events which have happened, it never will be.


Before I consider the issues in more detail, I will first identify the parties and outline the background to the Master Agreement, the key terms of that agreement and the events which have given rise to this dispute.

The parties


The first claimant is the parent company of the Astor group, a private investment group operating from Switzerland, and the second claimant is a wholly owned subsidiary of the first claimant. Nothing turns on the difference between the claimants or between the claimants and the companies which they succeeded as parties to the Master Agreement, and I will refer to them without distinction as "Astor".


The first defendant, formerly known as Emed Mining Public Limited and now called Atalaya Mining plc, is a Cypriot company whose shares are listed on the AIM market of the London Stock Exchange. I will refer to the first defendant as "EMED", which is the designation used in the Master Agreement. EMED is the ultimate parent company of the other three defendants, which I will refer to, respectively, as "EMED Tartessus", "EMED Holdings" and "EMED Marketing". EMED Tartessus is a Spanish company which owns the Rio Tinto Project.

Background to the Master Agreement


Astor first became involved in the project in 2004, when it lent money to a Spanish company which then owned the project called Mantenimiento en General del Sur, Mantesur Andevalo SL ("MSA"). The copper mine was dormant at the time but potentially very valuable, with 123 million tonnes of proven and probable reserves. Astor made loans to MSA amounting in total to some €6.7m for the purpose of restarting mining operations. The loans were secured by a pledge over the entirety of MSA's shares. The pledge was governed by Spanish law. Astor also entered into a contract known as the "Life of Mine Contract" with MSA's parent company, which gave Astor the right to purchase all the copper produced by the project at a preferential price.


In 2006 Astor enforced its pledge. MSA disputed Astor's right to do so and litigation in the Spanish courts followed. While the litigation was continuing, MSA purported to transfer the project to EMED Tartessus in exchange for a 49% shareholding in EMED Tartessus. The remaining 51% of the shares of EMED Tartessus were held by EMED Holdings.


Ultimately, Astor was successful in the litigation and was declared by the Spanish courts to be the owner of all MSA's shares. The transfer of the project by MSA to EMED Tartessus was therefore open to challenge on the ground that it was made without authority.

The Master Agreement


Against this background Astor and the EMED companies entered into the Master Agreement dated 30 September 2008. The broad commercial effect of the agreement was that Astor gave up its 49% stake in EMED Tartessus and its right to claim ownership of the project in return for agreement to receive consideration of up to €63.3m. Payment of most of the consideration, however, was deferred. This reflected the fact that the EMED companies did not have the resources available to pay a sum commensurate with the value of Astor's interest in the project in cash and that, until mining restarted, no revenue was being generated from which payments could be made to Astor.


More particularly, under the Master Agreement:

i) Astor agreed to sell its 49% shareholding in EMED Tartessus to EMED Holdings under a Share Purchase Agreement (clause 2);

ii) Astor agreed to accept the validity of the sale of the project to EMED Tartessus and renounced all rights to take any action or make any claim to challenge the validity of the transfer (clauses 3 and 4);

iii) The benefit of the loans made by Astor to MSA and its parent company was assigned to EMED by a Loan Assignment (clause 12);

iv) The EMED companies agreed to pay consideration of up to €63.3m to Astor consisting of (in rounded numbers): (a) €3.4m to be paid under the Share Purchase Agreement by an allotment of shares in EMED; (b) €9.1m payable under the Loan Assignment; (c) €6.8m to be satisfied by the allotment of further shares in EMED; and (d) Deferred Consideration of €43.8m (clause 6).

v) The Life of Mine Contract was cancelled and replaced with an Agency Agreement under which Astor was to be paid commission by EMED Marketing on all sales of copper produced by the mine for a period of 10 years (clauses 5 and 7).

vi) As security for performance of EMED's obligations under the Master Agreement and the Loan Assignment, EMED Holdings granted a pledge over the shares of EMED Tartessus to Astor (clause 9 and Schedule 1).


Pursuant to clause 6(b) and Schedule 2 of the Master Agreement (until it was later amended), the Deferred Consideration was payable in three tranches as follows:

i) €17,533,382.70 within 30 business days of the date on which "(A) the authorisations from the Junta de Andalucía to restart mining activities in the Project are granted to EMED or any other member of the EMED Group ("Permit Approval") and (B) EMED or any other company in the EMED Group secures senior debt finance and related guarantee facilities for a sum sufficient for the restart of mining operations at the Project (hereinafter the "Senior Debt Facility")… [and] the relevant company in the EMED Group can effectively draw down on the Senior Debt Facility";

ii) €13,175,000 within 20 business days of "first anniversary of the restart of mining activities", defined as "the date on which the mining facilities at the Project meet continuous 400,000 tonnes/month production of ore processing"; and

iii) €13,175,000 within 20 business days of the "second anniversary of the restart of mining activities".


By clause 6(f) of the Master Agreement, each of EMED, EMED Holdings and EMED Tartessus undertook "to use all reasonable endeavours to obtain the Senior Debt Facility with EMED Tartessus as borrower and to procure the restart of mining activities in the Project on or before 31 December 2009."


Clause 6(g) provided Astor with a number of protections as security for the obligations of EMED Tartessus to pay the Deferred Consideration. In summary:

i) EMED guaranteed performance of the obligations of EMED Tartessus;

ii) EMED Tartessus undertook not to encumber any of the assets of the project without Astor's written consent (other than as required by the provider of the Senior Debt Facility);

iii) The EMED companies undertook to procure that the documentation for the Senior Debt Facility would permit payment of the Deferred Consideration when due;

iv) EMED Tartessus undertook not to pay any dividend or distribution (other than of up to US$10m per annum for EMED Group expenses not related to the project), nor to borrow any amount other than pursuant to the Senior Debt Facility without Astor's consent, until the Consideration had been paid in full; and

v) EMED Tartessus undertook to apply any excess cash (after payment of expenses associated with the project) to pay any outstanding amounts of the Consideration due to Astor early.


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