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Indiana Resources Inch Closer to Tanzania Award

1 November 2023 13:50
ASX:IDA

Indiana Resources (ASX:IDA) has initiated a trading halt as they await the decision from the International Centre for Settlement of Investment Disputes (ICSID) regarding the Award in the ongoing dispute between the Company and the United Republic of Tanzania.

Background of the Dispute

Back in July, Indiana made an announcement about the commencement of arbitration proceedings against Tanzania by the ICSID. This decision came after the Tribunal issued its Award, mandating the Tanzanian government to provide compensation exceeding $109.5 million USD, which includes the interest that had already accumulated, to the claimants involved in the dispute.

The Tribunal reached a unanimous decision, concluding that Tanzania had unlawfully expropriated the Ntaka Hill Nickel Project on January 10, 2018, thereby violating the UK-Tanzania Bilateral Investment Treaty (BIT).

Indiana Resources, as a 62.4% shareholder in the combined holdings of the Claimants, is poised to receive a substantial financial compensation.

The Award comprises $76,706,461 USD for damages and additional losses, along with compounded interest at a rate of 2% above the USD Prime rate, calculated from January 10, 2018, until the payment date.

Furthermore, the Tribunal has determined that Tanzania is responsible for covering the legal costs of the arbitration, encompassing fees and expenses of the ICSID, further augmenting the Award by $4,113,581.07 USD.

Just two days following the issuance of the Award decision, lawyers representing the Claimants swiftly forwarded a demand letter to the Tanzanian Solicitor General. The letter requested a payment of $113,603,591.83 USD, with a specified deadline for compliance set on August 17, 2023.

According to the ICSID Rules, either party can submit an application for annulment within 120 days, which Tanzania has done, thereby prolonging the dispute resolution process. As a consequence, the interest on the Award amount continues to accumulate, at a rate of approximately $1 million USD per month.

In October, the first session of the ICSID ad hoc Committee was convened to deliberate on the timeline for Tanzania’s application for the annulment of the recent Award. A decision on the request to extend the stay of enforcement, to be announced shortly, coincides with Indiana’s return to trading.

You can read more about the background and timeline of the dispute here.

Bronwyn Barnes, the Executive Chair of Indiana Resources, emphasised that the Company remains fully committed to prioritising this critical effort to secure the recovery of the Award.

“My message to shareholders has been consistent, we had a clear and compelling position to support our claim for compensation and have worked tirelessly for five years to ensure that we maintained our position with strength and determination,” she said.

“We have consistently said that we would look to enforce an award against Tanzania, and that work will commence now.”

“We look forward to Tanzania honouring its obligations under the Bilateral Investment Treaty in line with its standing in the international community.”

Winshear Gold Dispute

While Indiana’s dispute is progressing towards resolution, it’s worth noting that the Government of the United Republic of Tanzania has previously been found in violation of the BIT and faced legal consequences.

This month, the Tanzanian government finalised a $30 million USD settlement with Winshear Gold Corporation (TSXV: WINS), resulting in a return of capital payment to Winshear shareholders, equating to CDN $0.25 per common share.

Winshear pursued its arbitration claims in 2020 against the Tanzanian government in relation to breaches of Tanzania’s obligations under the Canada-Tanzania BIT, regarding its SMP Gold Project.

Following an extensive legal process, the settlement was eventually reached.

You can read more about the background and timeline of the dispute here.

Winshear’s CEO Richard Williams said that the settlement, and subsequent shareholder payout, was the right course of action for the Company.

“This is the appropriate thing to do for our shareholders who have stood by the Company through some challenging times,” he said.

“The return of capital will make up for some of the losses incurred by shareholders as a result of the expropriation of the SMP Gold Project in Tanzania.”

“It will allow us to retain sufficient capital to complete a first pass drill programme at the Gaban Gold Project in Peru in the second quarter of 2024, after the coming rainy season ends.”

IDA’s Australian Stock Exchange-listed share price has risen 2.040% and is currently in a trade halt, priced at $0.05 cents (1.30pm UTC+ 8 hours).

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