|Indiana Resources' Ntaka Hill nickel project in Tanzania.
Source: Indiana Resources
Indiana Resources Ltd. and Winshear Gold Corp. will seek talks ahead of arbitration claiming that Tanzania breached bilateral investment treaties for placing their respective nickel and gold assets up for tender.
TSX Venture Exchange-listed Winshear first said Jan. 10 that it had given Tanzania's attorney general a notice of both the existence of an "investment dispute" with the government regarding its SMP gold project and its intent to submit a claim to arbitration over its four retention licenses.
ASX-listed Indiana then said Jan. 15 that it had notified Tanzania President John Magufuli, the country's solicitor general and the Tanzanian Ministry of Energy and Minerals of the same intention for its Ntaka Hill nickel project over another investment dispute over its retention license.
Both notifications trigger a six-month period to resolve the issue with the government, after which they will go to the International Centre for the Settlement of Investment Disputes for arbitration.
|Indiana Resources Chair
Source: Indiana Resources
Indiana Resources Chair Bronwyn Barnes told S&P Global Market Intelligence that Tanzania posted the coordinates of various retention licenses — not the names of the projects or operator companies — as up for tender on its Swahili-language website Dec. 19 with a condition that new owners must compensate the old ones.
However, on Dec. 20, that condition was removed. Indiana said all these measures breached Tanzania's bilateral investment treaty obligations to investors not to nationalize or expropriate their investments, "or subject them to measures having effect equivalent to nationalization or expropriation without prompt, adequate and effective compensation."
Winshear said Tanzania's amendment of its 2010 Mining Act in 2017 abolished the legislative basis for retention licence classification with no replacement classification, then the new mining regulations Tanzania published on Jan. 10, 2018, cancelled all retention licenses issued before that point, thus transferring the rights over all those areas to the government.
In May 2018, Tanzania commercial law firm Fin & Law named eight local companies and subsidiaries that run projects among 11 retention licenses affected when the country started issuing mining permits again with the establishment of the Mining Commission the previous month.
These include the Kabanga joint venture between Glencore PLC and Barrick Gold Corp., which Reuters had reported in May 2018 as having been revoked.
Though Glencore would not comment, people familiar with the matter told S&P Global Market Intelligence that Kabanga was on Tanzania's site as being up for tender, along with the Wigu Hill rare earths project for which ASX-listed Vital Metals Ltd. signed a project development and option agreement with TSX-V listed Montero Mining & Exploration Ltd.
Indiana engaged both Tanzania's Minister for Energy and Minerals and the Mining Commission from January 2018 to December 2019 to resolve a suitable tenure mechanism for Ntaka Hill's licence to be reinstated.
During that time, Indiana also submitted a prospecting license application for the project as directed by the government, which Barnes said was never granted, merely "held in abeyance while they said that the Mining Commission decided what the next steps would be."
Having outlined a four-year, US$8 million to US$11 million work program to the minister and the Mining Commission in October 2019 to progress the project, Barnes said she was reassured at a Dec. 9 meeting with those parties and other senior government officials that Indiana's historic investment would be respected and the government would "shortly advise a process to agree an appropriate tenure" for Ntaka Hill.
Barnes said Indiana's board members met Tanzanian officials four times over that two-year period, each time being given the aforementioned guarantees, which makes the latest move feel like a "slap in the face" in light of the A$60 million Indiana has spent on Ntaka Hill over the past 18 years.
"If the Tanzanians think we're just going to walk away quietly and let them take it off us, they were wrong," Barnes said of Ntaka Hill, particularly given a 2012 scoping study that estimated an aftertax net present value of US$212 million for the project.
In March 2019, Verisk Maplecroft said Tanzania was third among the countries it rated as having "extreme risk" behind Venezuela and the Democratic Republic of the Congo, which have the joint highest risk globally according to the firm's Resource Nationalism Index.