Miner appeals to OP over "lost" P115m investment

MBONGENI MGUNI
Staff Writer | Friday June 14, 2013 00:00

 

By the time of the rejection last month, Mount Burgess had spent 14 million Australian Dollars (P115 million) over the years, on various studies and activities on two Ngamiland sites, eventually proving mineralisation of 33 million tonnes of both zinc and silver.Mount Burgess (MTB) originally applied for a renewal of its prospecting licence last March and after several requests for clarification by the ministry, eventually received a notice of rejection last month. In the intervening 14 months, the Australian Securities Exchange-listed company claims to have spent 1.2 million Australian Dollars (P9.8 million).

Correspondence to MTB dated May 13, 2013 and signed by Minerals, Energy and Water Resources Minister Kitso Mokaila indicates that the refusal to renew the prospecting licence for another two years was due to the ministry's dissatisfaction with the pace of developments at the project. The correspondence was made public by Mount Burgess (MTB) as part of the ASX disclosure obligations.

'In accordance with the Mines and Minerals Act, I reject the application for renewal of (the) prospecting licence...because Mount Burgess failed to carry out the approved prospecting programmes,' Mokaila wrote.'Mount Burgess failed to demonstrate that proper efforts have been made to complete the evaluation work for the application to be considered under the Mines and Minerals Act.' Mokaila's letter accuses MTB of varying its prospecting programme, with apparent reference to the company's failure to complete a feasibility study during the last prospecting licence period. While the minister appears to acknowledge MTB's defence that the study was impossible without proven access to 40MW of power, his letter states that varying of the prospecting programme can only be done after ministerial approval by law.

Countering the minister, MTB directors, lead by managing director, Nigel Forrester, say the ministry queried various elements of the request for renewal and received responses but still rejected the application 14 months after the initial request. The queries range from the budget for exploration proposed by MTB had the lease been renewed, alleged paucity of activities under the expired lease and changes to the prospecting programme.According to the directors, the appeal to Kedikilwe is on both the rejection and the 'unacceptable' time taken to arrive at a rejection.

'On 6 June 2013, Mount Burgess lodged an appeal with the Office of the Vice President of Botswana in respect of the previously held prospecting licence,' MTB directors wrote.In previous correspondence to the Australian Securities Exchange, Mount Burgess said the rejection of the prospecting licence's renewal would cost up to eight jobs while having implications on the structure of its debt funding.Investors interviewed at this week's Botswana Resource Sector Conference expressed mixed sentiments on the developments around MTB and its Ngamiland holdings.

'This could either work out very well for government or very badly,' one executive said, requesting anonymity due to what he termed 'the sensitivity of the issue'.'On one hand it shows everyone that Botswana is very serious about developing its minerals and will not tolerate any perception that investors are holding licences for speculative purposes. 'On the other, it sends a message that the country is a stickler for laws and is prepared to boot investors who have ploughed millions in exploration. Mining is a tricky business, affected by all sorts of internal and external factors. 'Investors will generally seek out governments that are sensitive to the vagaries of exploration, although again this is far from being the only consideration.' Mount Burgess still holds ground in Botswana where it is exploring for diamonds.