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A Surrey prospector who used his connections and knowledge of mineral exploration to bring Chinese investors to a Tanzanian mining project owned by a Vancouver junior miner is suing the company for a finder’s fee.
In a suit filed in the BC Supreme Court, Harpreet Sangha is suing Orca Gold (TSX-V:ORG) (formerly Canaco Resources Inc.) and East Africa Metals (a company formed by Canaco) for $16 million.
Sangha calculates that’s how much his finder’s fee should be for introducing Andrew Lee Smith – former Canaco CEO and current interim CEO of East Africa Metals – to key players in Tanzania and investors in China.
None of Sangha’s claims have been proven in court.
Sangha claims he spent considerable time and money in Tanzania getting to know key players in government and the mining industry, and later on spent time and money in China to drum up investment for mineral properties in Tanzania.
His contacts in China included executives with SinoTech (Hong Kong) Corp. Ltd., which eventually invested in a Canaco play.
Sangha says he introduced Smith to the Handeni property in Tanzania, which Canaco bought.
Sangha later introduced Smith to investors in China. He claims he paid Smith’s expenses during a trip to China, at a time when Canaco was “in serious financial difficulty,” and its stock was trading at $0.03 per share.
Sangha claims he paid for Smith’s business-class airfare, hotel and provided $3,000 in cash to cover other personal expenses during a trip to China, where Smith was introduced to investors, which later led to SinoTech investing $1.6 million in Canaco.
Canaco paid a finder’s fee of 1 million shares at $0.05 per share and 500,000 in warrants to a translator – Dr. Weiguo Lang – that Sangha had introduced Smith to, and which led to SinoTech’s investment.
SinoTech later sold its Canaco shares for $5.40 per share, Sangha claims.
Sangha values his finder’s fee at $16 million, “based on the fact that the plaintiff should have been issued twice as many shares and warrants as Dr. Lang,” and based on the share price SinoTech received when it sold its shares.
Although there appears to have been no written agreement in place, Sangha claims there was “an implied but clear term” that Sangha would be compensated for any investments he arranged.
Even in the absence of such an agreement, common law recognizes a finder’s fee “in the context of the introduction by an intermediary,” Sangha’s claim states.
By Nelson Bennett
