Indiana declares victory in fight for compensation

Tanzania has 45 days to provide a written undertaking that it will compensate Indiana Resources for the loss of its project
Ntaka Hill nickel sulphide project was unlawfully expropriated by the Government of Tanzania in early 2018
If Tanzania fails to provide the government backed guarantee of payment, Indiana can commence seizing Tanzania’s assets
Indiana chair declares victory for shareholders after lengthy arbitration proceedings

The Tanzanian government has been given 45 days to provide a government backed guarantee that it will pay almost US$120m in compensation for the unlawful expropriation of the Ntaka Hill nickel sulphide project more than five years ago.  If Tanzania fails to provide the guarantee then Indiana can commence seizing Tanzania’s assets in lieu of cash payment.

Ntaka Hill was an advanced, development ready asset with an estimated JORC Resource of 56.2 million tonnes at 0.63% nickel, 0.14% copper and 0.02% cobalt for 356,380t contained nickel.

It was expropriated more than five years ago by the Tanzanian government following legislative changes and has since been developed by other parties.

This led Indiana Resources (ASX: IDA) the majority shareholder of three companies and the entity leading the arbitration process on behalf of the claimants – two incorporated in London and one in Tanzania – involved with the project to commence arbitration against Tanzania for compensation relating to the loss of its sunk costs over time in exploring the project.

It was vindicated in July this year when the International Centre for Settlement of Investment Disputes (ICSID) ruled that Tanzania had unlawfully expropriated the Ntaka Hill licences and that the claimants are entitled to compensation of US$112.9m plus additional costs of US$4.2m.  Interest at the rate of approximately US$1 million per month will continue to accrue until Tanzania either pays the amount, or Indiana seizes Tanzania’s assets to the value of the Award.

Indiana will be able to seize assets owned by Tanzania in any country that is a signatory to the World Bank – which means over 189 member states.  Indiana has commenced the process of identifying assets, and is ready to commence this process immediately upon the expiry of the 45 days.

Decision a ‘victory’ for IDA shareholders

IDA reported today that Tanzania must now provide a written undertaking from authorised government officials within 45 days of the latest ICSID decision requiring the East African country to abide by the final annulment decision when delivered by the ICSID ad hoc committee.

The Government of Tanzania must also recognise the award and pay the full amount plus interest to the claimants within 45 days of the final decision on the annulment, as well as not subject payment of the award to any enforcement proceedings in domestic courts in any jurisdiction, including in its own country.

If Tanzania fails to provide the written undertaking within 45 days, the stay of enforcement will be lifted, and Indiana can commence seizing Tanzania’s assets to the value of the Award.

The ICSID ad hoc committee did not take into consideration Tanzania’s assertion that it was “aggrieved and dissatisfied” with the award as part of its decision to continue the stay of enforcement.

Alleged aggrievance and dissatisfaction does not qualify as criterion for any of the grounds for annulment, the ad hoc committee said.

IDA executive chair Bronwyn Barnes said the committee’s decision as a victory for the company, which is now focused on developing gold, REE and base metal assets in South Australia’s Gawler Craton.

“We look forward to having Tanzania either comply with the requirements of the ICSID ad hoc committee within 45 days – or not,” she said.

“In either circumstance, the claimants have comfort that ICSID is requiring Tanzania to comply with the award through providing sufficient comfort through a legally binding commitment that if the award is not annulled, the claimants will promptly receive the full amount of the award to which they are entitled.

“IDA shareholders should take comfort in the disciplined legal process that is being followed by the ad hoc committee and that Tanzania is clearly engaging in this process to the best of their ability.

“Put simply, we consider this a victory.”

Tanzania ‘ready, willing and able’ to pay compensation

IDA has agreed to provide a guarantee that in the event the annulment request is granted in favour of Tanzania, the claimants will reimburse Tanzania monies secured through enforcement corresponding to the annulled portion of the award.

“IDA has led the ICSID proceedings on behalf of all of the claimants’ shareholders and is comfortable to provide this guarantee,” she said.

Barnes also said Tanzania had confirmed in writing to the ICSID ad hoc Committee that it was “ready, willing and able” to honour the Award if it is not annulled, as well as having sufficient means to pay the amounts due to the claimants”.

 

This article was developed in collaboration with Indiana Resources, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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