Trojan Exploration Co (Pty) Ltd and Another v Rustenburg Platinum Mines Ltd and Others

• Jurisdiction: South Africa
• Citation: 1996 (4) SA 499 (A)

Trojan Exploration Co (Pty) Ltd and Another v Rustenburg Platinum Mines Ltd and Others
1996 (4) SA 499 (A)

1996 (4) SA p499

Citation	1996 (4) SA 499 (A)
Case No	609/94
Court	Appellate Division
Judge	Botha JA, Van Heerden JA, Nestadt JA, Schutz JA and Plewman AJA
Heard	May 2, 1996; May 3, 1996
Judgment	May 31, 1996
Counsel	G L Grobler SC (with him L J Bekker) for the appellants.; D J Shaw QC (with him J Browde QC and F J Bashall) for the respondents.

Flynote : Sleutelwoorde H

Mines and minerals — Mineral rights — Nature of — 'Precious metals' as defined in s 3 of Precious and Base Metals Act 35 of 1908, as amended ('the Gold Law') — 'Precious metal' defined as 'gold and silver and their ores and gold or silver I found in combination with a base metal, where such gold and silver cannot be worked apart from the base metal . . .' — Phrase 'and their ores' relating only to case where gold or silver not intermixed with base metal — Accordingly, ores of precious metals not including ores in which precious and base metals found in combination — Nor any suggestion that where combination ore worked, holder of precious metal rights may retain base metals won or that holder of base metal J

1996 (4) SA p500

A rights may retain precious metals won, even though in each case holder entitled to work ores containing other holder's metals — Holder of precious metal rights not entitled to retain and sell base metals won for own account — Nor does s 1 of Mining Rights Act 20 of 1967 (which superseded the Gold Law) contain an implied confiscation of base metal and mineral rights in favour of precious metal B grantee.

Mines and minerals — Mineral rights — Cession of — 'All rights to precious metals' in certain area transferred by registered notarial cession — In ordinary course such cession not including rights to such base metals as are present in the ore C containing precious metals — Preventing cessionary from extracting and refining also base minerals present in ore not constituting derogation from right to mine precious metals, nor is power to mine, refine and sell such base metals a power necessarily ancillary to mining of precious metals — Mineral rights holder not entitled to remove from ground more than is granted to him — Right to mine D one mineral not authorising taking of another with which it is found in association — Cessionary, in course of mining of precious metals, entitled also to extract ore containing base metals and minerals, but not to appropriate base minerals and metals later separated or refined.

Mines and minerals — Mineral rights — Competing rights — One party holder of 'all rights to precious metals', the other the holder of all other mineral rights — First E party, in course of mining of precious metals, by necessity also extracting ore containing base metals and minerals, to which second party had rights — Base metals and minerals in question not economically exploitable on their own — First party entitled to mine, refine and sell also base metals, subject to rendering of F account to second party — Upon severance of ore by first party both parties becoming co-owners thereof, though form of co-ownership unusual manifestation thereof.

Headnote : Kopnota

The issue in this case was whether the respondents, in whom the rights to the precious metals in a certain area vested, were entitled, in the light of the appellants' right to the G base metals and minerals in the same area, to extract and sell also those base metals removed as was 'by-products' of their mining of precious metals.

The history of how the parties obtained their various rights is briefly as follows. The right to minerals was separated from the land in question (a farm called Umkoanesstad) in 1925, and in 1957 ceded by their original owner to the North Vaal H Mineral Co Ltd ('North Vaal'), which in 1966 split the mineral rights by transferring 'all rights to precious metals' to the first respondent ('Rustenburg') and itself retaining those rights which had not been ceded (viz the rights to base metals and minerals). The 1966 cession was governed by the Precious and Base Metals Act 35 of 1908 ('the Gold Law', amended by the Mineral Law Amendment Act 36 of 1934), which was I later superseded by the Mining Rights Act 20 of 1967 ('the 1967 Act'). In 1989 North Vaal ceded the right to prospect for base metals and minerals to the first appellant ('Trojan'). At the same time it ceded the residual mineral rights it still held to its holding company, AFC Investments Ltd ('AFC') (though subject to Trojan's rights under the prospecting contract). In 1991 Rustenburg acquired the 'exclusive rights of mining precious metals' by virtue of a mining lease issued by the then Lebowa Government. These rights were then ceded to the second respondent, Lebowa Platinum Mines Ltd ('Lebowa'). In 1993 the second appellant, Pyramid Platinum Ltd ('Pyramid') purchased the residual mining rights from AFC, the cession of the same being registered in February 1993. J

1996 (4) SA p501

A At this time the position was accordingly as follows: Trojan was the holder of a registered notarial contract in respect of all minerals in the area, save for precious metals. Pyramid was the registered holder of the mineral rights in respect of which Trojan had the prospecting contract. Rustenburg was the registered holder of the rights to precious metals. Its subsidiary, Lebowa, had the mining title in respect of precious metals by virtue of a registered mining lease as defined in s 1 of the 1967 Act. The third respondent was the Minister of Mineral and Energy Affairs, who took no active B part in the proceedings.

The parties were agreed that the ores mined by Lebowa contained a mixture of precious metals and base metals and minerals in a variety of combinations such that it was impossible to mine one group without at the same time mining the other. This fact C was at the root of the problems in the instant case. While Trojan had already in 1989 demanded that Lebowa refrain from mining anything other than precious metals, Lebowa was by 1990-1 extracting precious metal ores in terms of permission given under s 21 of the 1967 Act. The ore raised by Lebowa from Umkoanesstad was indiscriminately mixed with ore from other areas before the refining process was started. Enriched slurry was taken from Lebowa's mine to Rustenburg's smelter, where D platinum group metals as well as certain base metals were extracted, whereafter Rustenburg sold on Lebowa's behalf not only the platinum, but also the base metals, without any accounting to Pyramid. This was Pyramid's principal complaint - that the base metals and minerals to which it had the rights were simply appropriated by Rustenburg and Lebowa, who then pocketed the proceeds.

The relief sought by the appellants as applicants in the Court a quo, a Provincial Division, was a declaration that Pyramid was the co-owner of, alternatively had E retained 'its rights' to, the ore extracted by the respondents by virtue of their rights to precious metals, and that it was entitled to restrain the respondents (1) from preventing Pyramid from exercising its rights as co-owner of the ore, (2) from mixing the ore with ore from other places, and (3) from appropriating the base metals and minerals and selling them for their own account. The Court a quo dismissed the application on the F basis that the Gold Law, which governed the 1966 cession of the rights to precious metals to Rustenburg, allowed the holder of such rights (a) to mine payable ore notwithstanding that it contained base metals and minerals, the rights to which were held by another, and (b) to retain these base metals and minerals as his own and sell them for his own account. In other words Lebowa had the right to mine G platinum-bearing ore even though it also contained base minerals, and the appellants lost all their rights to what was contained in such ore because it contained precious minerals worth mining for. The effect was to construe the Gold Law as allowing one holder to confiscate the minerals of another. The alternative argument for the respondents was based on co-ownership and stated that, even without reference to statutory aids, a proper construction of the 1966 cession led to the same results. This argument was also accepted by the Court a quo. H

The Appellate Division handed down five separate judgments: a majority judgment by Schutz JA, in which Botha JA and Nestadt JA concurred, and a minority judgment by Plewman AJA, in which Van Heerden JA concurred. The following constitutes a summary of Schutz JA's judgment. According to Schutz JA the Appellate Division had to answer the following questions (at 514E-515F):

1.1

I Was the Court a quo correct in holding that the Gold Law allowed the holder of rights to precious metals on proclaimed land to mine payable platiniferous ore notwithstanding that it contained base metals and minerals, the rights to which were held by another, and to retain such base minerals and sell them for its own account?

1.2

If 1.1 were answered in favour of the respondent, was the Court a quo correct in holding that the 1966 cession had to be interpreted in conformity with the Gold Law, so that Rustenburg was entitled not only to mine the ore in question, but to retain for itself base metals extracted from the ore?

1.3

Was the Court a quo correct in holding that the 1966 cession should in any event be interpreted to the same effect on another ground? On appeal two such grounds were relied upon by the respondents:

1.3.1

Because 'the rights to precious metals, entitled the respondents to mine platiniferous ore also containing base metals, it would constitute a J

1996 (4) SA p502

reduction of such rights if they were to be prevented from extracting for their own...