Aussie explorer threatens govt with SADC
Mbongeni Mguni | Friday August 15, 2014 14:51
The two parties have tussled since Monday May 13, 2013 when Mount Burgess learnt that the Ministry of Minerals, Energy and Water Resources had rejected its application for the renewal of a prospecting licence for an area in Ngamiland potentially holding 33 million tonnes in zinc and silver.
Mount Burgess had spent 16.2 million Australian Dollars (P133.5 million) in Ngamiland between 2003 and 2012 in proving the mineralisation, before pumping a further 1.2 million Australian Dollars (P9.9 million) in the months to May 13 on the goodwill assumption that the licence would be renewed.
This company lost an appeal to the Vice President and a High Court case, in pursuit of a discretionary third renewal of the licence and expects its Court of Appeal date next January.
“The company is reviewing the potential of pursuing investor-state arbitration proceedings against Botswana under the SADC Protocol on Finance and Investment, if required,” the company says in a statement. “The Protocol provides certain protections to investments in the SADC and Mount Burgess claims that Botswana has breached its obligations to accord several of these protections.”
According to Mount Burgess the SADC Protocol requires its dispute with Botswana to be referred to the regional body’s Tribunal for dispute resolution. With the Tribunal as yet inoperational, the Australian company says the Protocol gives it the right to refer the dispute to the International Centre for the Settlement of Investment Disputes.
Analysts believe Mount Burgess’ latest tactical move is designed to provide protection against any adverse ruling by the Court of Appeal next January and possibly nudge government into conceding ahead of the court date.
“The SADC Protocol states that the referral of an investment dispute can only take place six months after the State Party and the investor concerned have exhausted all local remedies,” says a local resources analyst who cannot be named as both parties are within his client list.
“Mount Burgess will be sending the message that even if the supreme court of the land rules against them, they are still exploring other means of relief.
“They are saying they are unwilling to simply write off their investment and move on.”
In contrast, in 2011, CIC Energy, wrote off a P28.9 million investment it had spent over five years in exploring and eventually proving a 300 million tonne coal resource at its former Mmamabula South licence.
According to the analyst, Mount Burgess’ latest moves are galvanised by its belief that its chief points have not been addressed by the High Court.
“They were defeated on a technicality because the High Court ruled that they had not cited the right defendant,” the analyst said.
“Their case did not proceed to being argued on merit. They believe justice is on their side, but if they lose, they want a Plan B.”
Mount Burgess’ fight is being led by founding shareholder and 30-year mineral exploration veteran, Nigel Forrester, who listed the company in 1985.
Indicative of their steel in the battle against government, CEO Nigel and his wife Jan, who is the company secretary, have not only foregone their salaries since last August, but have also pumped more of their own funds into its operations.
In the quarter to June 30, 2014, Nigel and Jan lent the Company a further AU$439,749 (P3.62 million) to clear a bank overdraft and for working capital.
Between June 30 and July 21, the couple had loaned Mount Burgess an additional AU$12,000 (P98,880) for more working capital.
“In addition, Nigel and Jan have provided the company with a moratorium in respect of interest on their loan to the company,” a Mount Burgess statement reads.
Government, however, has been equally resolute on the dispute, with Minerals Minister, Kitso Mokaila outrightly dismissing each of the requests Mount Burgess has put forward that have been in his control.
“I have considered your representation and find it to be unsatisfactory,” Mokaila wrote to Mount Burgess in initially rejecting the discretionary renewal of the licence.
Mokaila says Mount Burgess diverted from the approved prospecting programme, failed to conduct a feasibility study and had already exhausted its two permissible renewals of two years each at the time of rejection.
Forrester, meanwhile, charges that Botswana’s power crisis meant that key milestones could not be met and further argues that government was advised on this crucial challenge throughout the years of exploration. Explorers, investors and other market participants are keenly eyeing the case, which will mark one of the few times a mineral dispute pitting an explorer against government, has landed in the highest court and beyond.