A website editing mishap has led to a landmark lawsuit with nickel and gold explorer Indiana Resources (ASX: IDA) having now secured USD $4.65m litigation funding to advance its claims against the Tanzania Government for international law and obligation breaches.
Upon news of Indiana’s intention to file a suit, various legal financiers expressed interest in funding the explorer’s case but the Company elected to progress with UK-based Litigation Capital Management.
“I am incredibly pleased that we have secured a litigation funding agreement with LCM that can cover legal costs in bringing our Claim to Arbitration against the Government of Tanzania. Due Diligence activities have commenced to review the merits of the Claim and I look forward to updating shareholders on progress in due course,” said Indiana Resources Executive Chairman, Bronwyn Barnes.
“The fact that we now have a funding solution where litigation is funded by an experienced and dedicated party and costs will not be borne by Indiana’s shareholders is a concrete step in preparing for arbitration to commence as soon as possible.”
Central to the case is the Ntaka Hill Nickel Project in South-East Tanzania where more than USD $60m has been spent on the project between joint venture partners, of which Indiana Resources has 60.36%.
The project is estimated to contain more than 350,000 tonnes of nickel, however, Indiana’s tenement retention licenses were revoked by the Tanzania Government in 2018, halting progress and leading to the commencement of legal proceedings.
Nickel currently trades around $USD $12,000 per tonne.
Discussions between Indiana and Tanzania officials commenced amicably with Indiana representatives claiming they were reassured by the Government that their historical investment in the project and region would be respected. However, the issue was quickly turned on its head in December 2019 when the Mining Commision of Tanzania announced a public invitation to tender on their website for the development of areas previously covered by Retention Licenses.
Published on the website on 19 December 2019, the tender invitation, which was not emailed to Indiana Resources, included a clause stipulating that successful bidders must compensate previous Retention License holders for incurred exploration costs. On 20 December 2020, this clause was removed from the Mining Commision of Tanzania’s website.
In January 2020, Indiana Resources served notice to the Tanzanian President, Attorney General and Ministry of Energy and Minerals.
Indiana Resources, which currently trades on the ASX with a market cap around AUD $5m, has not yet disclosed how much they will be seeking in compensation but it is expected to be significantly more than the USD $60m spent on the Ntaka Hill Nickel Project to date.
As per the terms of the litigation funding agreement, if there is no settlement or award, then Litigation Capital Management is not entitled to any repayment of the financing facility.
International law firm Lalive are advising Indiana Resources on the claim.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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