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Indiana Resources Receives Undertaking for $118M USD Award

27 December 2023 09:52
ASX:IDA

Indiana Resources Limited (ASX: IDA) has announced it has reached a substantial milestone in its ongoing dispute with the Republic of Tanzania, with the Attorney General of Tanzania providing an undertaking to the Claimants and the ad hoc committee of the International Centre for Settlement of Investment Disputes (ICSID).

The undertaking outlines Tanzania will:

  • Pay the full amount of the Award plus interest to the Claimants within 45 days of the final decision on annulment;
  • Not subject the payment of the Award to any enforcement proceedings or to the scrutiny of Tanzanian courts;
  • Abide by the final annulment decision when delivered by the ICSID ad hoc Committee

An Ongoing Legal Dispute

In July, the arbitration proceedings commenced with the ICSID ruling in the Claimants favour, mandating the Tanzanian government to provide compensation exceeding $109.5 million USD, which includes the interest already accumulated, to the Claimants involved in the dispute.

The group of Claimants consists of Ntaka Nickel Holdings Ltd, Nachingwea UK Ltd, and Nachingwea Nickel Ltd, of which Indiana holds a 62.4% majority stake, poising the Company to receive significant financial compensation.

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

Tanzania submitted an application for annulment following this decision, thereby prolonging the dispute resolution process.

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. By November the ICSID ad hoc Committee reached a decision regarding the Stay of Enforcement, requiring the Tanzanian government to pay the full award amount, which now stands at $118 million USD, to the Claimants within 45 days of the completion of the hearing.

Providing an Undertaking

After this prolonged legal process, on the 13th this month, Tanzania submitted a letter to the ad hoc Committee with an undertaking by the Attorney General of Tanzania, however, the Committee advised that this undertaking did not comply with the Committee’s Decision on the Stay of Enforcement of the Award made in October 2023.

Today, the Company announced the Attorney General’s undertaking has been received by the Committee and Claimants, which stipulates, if the annulment is unsuccessful, Tanzania will pay the full $118,991,870 USD award (plus interest) within 45 days.

Interest Breakdown

Interest on the Award continues to accrue at the rate of approximately $1 million USD a month.

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Figure 1: Table outlining the monthly increase in award debt over the next six months.

The Next Steps

The next phase of the Annulment Proceedings is as below:

  1. Tanzania’s Memorial on Annulment – 6 weeks from the Committee’s Decision on Claimants’ Objection
  2. Claimants’ Counter-Memorial on Annulment – 6 weeks from the Memorial on Annulment
  3. Tanzania’s Reply on Annulment – 4 weeks from the Counter-Memorial on Annulment
  4. Claimants’ Rejoinder on Annulment – 4 weeks from the Reply on Annulment
  5. Hearing on Annulment – To be decided in consultation with the Claimants and Tanzania

Further background and a timeline of the dispute can be found on Indiana’s website: here.

Company Comments

Indiana Resources Executive Chairman Bronwyn Barnes commented on the dispute update.

“This is a tremendous outcome for the Claimants that brings us a considerable step closer to recovering the full amount owed as outlined in the Award which now stands at more than $118 million USD,” she said.

“The undertaking provided by the Tanzanian Attorney General has been accepted by ICSID as meeting the requirements of the ad hoc Committee in their decision to not lift the stay on enforcement.”

“This means that if Tanzania’s request for annulment is not granted, then Tanzania will pay the full amount of the Award, including interest – currently $118 million – to the Claimants within 45 days of the decision being handed down. Indiana looks forward to providing further updates as this matter progresses in the New Year.”

IDA’s Australian Stock Exchange-listed share price has risen 25% and is currently trading at $0.080 (9.45am UTC+ 8 hours).

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