Johann Jacobus Cilliers obtained an urgent interdict in the Cape Town High Court last week to stop Kimberley Consolidated Mining, in which he has shares, selling the diamond, found last month at the miners' Bo Karoo site in the Northern Cape. The return date is this Thursday.

The court granted Cilliers a temporary order when he asked it to prevent the mining company from selling the diamond until "provisional judicial managers have been appointed" in respect of Kimberley Consolidated Mining and its Channe l Mining subsidiary. Cilliers claimed that the company was in financial difficulties, and would receive only 15% of the profit of the sale of the diamond because of an invalid subcontractor agreement with Pico Diamonds, controlled by Trevor Pikwane.

He wants the company to retain all the proceeds of the sale which would help ensure its survival. Cilliers said the money could be used to pay creditors, reacquire mining equipment and pay dividends to investors.

But the KCM CEO Phemelo Sehunelo told The Times the company was ready for a fight. "One, we are ready to defend the action and, two, we have a good subcontractor agreement with Pico Diamonds. And we have been keeping records of everything. Since the inception of this company or joint venture, this single shareholder [Cilliers] has been causing problems for us," said Sehunelo.

But Cilliers claimed the company and its subsidiaries were plagued by corruption and "maladministration". In an affidavit submitted to court, Cilliers claimed that in 2008 Channel Mining had a mere R22364 in its bank account. "This created a cash-flow crisis as there was no money to pay any of the creditors. In order to generate the necessary cash flow, [the company and the subsidiaries] approached Standard Bank and refinanced certain mining equipment belonging to Channel Mining which, at that stage, had been paid off, and thereby secured an amount of R7-million from Standard Bank," said Cilliers.

But just days after the payment was received, former Kimberley Consolidated Mining CEO Hein le Riche allegedly transferred R2.5-million from Channel Mining's account into his personal account. Between 2006 and 2008, Le Riche evidently channelled more than R21-million into his own account. Cilliers also claimed that in 2008 the company's auditors found that the cash flow of the company and its subsidiaries would not be enough to sustain it - and that about R14-million was needed to ensure ''future viability".

Last year, the JSE-listed company ran into trouble with the authorities for failing to submit annual financial statements. This month, the company was delisted. On November 3, the company announced its discovery of the "light-pink" diamond in the Northern Cape.  "After the cleaning process, the diamond will be placed on tender," said its board of directors. "In terms of the subcontractors agreement, KCM will receive royalty of 15% of the gross selling price of the diamond," they said.

Last week, Judge Elize Steyn of the Cape Town High Court ordered an urgent hearing of the matter and gave the company and the other respondents up until this Thursday to respond. Sehunelo also said that for the past four months not a single diamond had been produced.

"When we didn't find any diamonds [Cilliers] was not there, he didn't take any action. "From our side, we are focused, and we will continue to mine and work with the subcontractor, who has already spent millions and worked diligently with us."As for Cilliers's valuation of the diamond, Sehunelo said: "That is his own estimation and good luck to him."

Ernest Blom, chairman of the Diamond Council of South Africa, said pink diamonds were expensive because they were rare. ''The more intense the pink, the more expensive it is," he said. Last week, a 24.78 carat pink diamond was sold for $45.75-million at a Sotheby's auction.