SMP Gold Project
SMP Gold Project Dispute, Tanzania
Winshear has retained LALIVE (London) LLP as legal counsel to reach a resolution with the Tanzanian government regarding breaches of Tanzania’s obligations under the Canada-Tanzania BIT relating to the SMP Gold project in Tanzania. The Company, with advice from LALIVE, is seeking a funder to pay all the legal fees in return for a percentage of any settlement moving forward so that the Company may focus all of its funding on exploration of its Peruvian mineral projects.
On January 10, 2020 Winshear Gold Corp. delivered to the Attorney General of Tanzania a Notice of Intent to Submit a Claim to Arbitration (“Notice of Intent”) in accordance with the 2013 Agreement for the Promotion and Reciprocal Protection of Investments (Bilateral Investment Treaty or “BIT”) between Canada and Tanzania. Winshear has thereby formally notified the Tanzanian government that there exists an investment dispute between Winshear and Tanzania.
The dispute arises out of certain acts and omissions of Tanzania in breach of the BIT and international law, relating to the Company’s investment in the SMP Gold Projectlocated in SW Tanzania (“the Project”). The Company commenced exploration activities on the Project in 2006. Subsequently, the Company, through its Tanzanian subsidiary, applied for and was granted 4 Retention Licences which covered the Project’s mineral resource areas (the “SMP Retention Licences”).
In July 2017 the Government of Tanzania announced wide-ranging and severe amendments to the Mining Act 2010, which, inter alia, abolished the legislative basis for the Retention Licence classification with no replacement classification. On 10 January 2018 Tanzania published the Mining (Mineral Rights) Regulations 2018. Under Regulation 21 of said Regulations, Tanzania cancelled all Retention Licences issued prior to 10 January 2018 at which point they ceased to have any legal effect.
The rights over all areas under Retention Licences, including those under the SMP Retention Licences, were immediately transferred to the government of Tanzania. On 19 December 2019, the Mining Commission of Tanzania announced a public invitation to tender for the joint development of areas previously covered by Retention Licences, including the SMP Retention Licences (the “19 December Tender”). The abolition of the SMP Retention Licences and the removal of the rights to the land conferred thereunder has rendered the Project valueless.
Thus, as a direct consequence of the legislative, regulatory and other measures by Tanzania, the Company has lost completely its investment. The Notice of Intent is a necessary step before the Company may initiate international arbitration under the BIT should a resolution with the Tanzanian government not be reached. The filing of the Notice of Intent initiates a 180-day consultation period between the Company and Tanzania during which time they are to attempt to settle the dispute amicably. If no amicable settlement is reached in that 180-day period, the Company may then initiate international arbitration proceedings against Tanzania in accordance with the BIT.
Winshear confirms that it is taking all necessary actions to preserve its rights and protect its investments in Tanzania. The Company’s desire is for both parties to reach a mutually acceptable outcome. If such an outcome is not achieved before the expiry of the 180-day consultation period, the Company expects it will have no alternative but to pursue its claims before an international tribunal and seek full compensation for damages the Company has suffered as a result of Tanzania’s acts and omissions. Winshear has retained LALIVE (London)LLP, an international arbitration legal firm, to advise.
Winshear has written off the value of the SMP gold deposit as a result of Tanzania cancelling the SMP Retention Licences and transferring the rights there under to the government. The Company has filed the Notice of Intent to protect its substantial investment. The Company will consider any other actions necessary to ensure it is compensated in full for the loss of its investment in the SMP Gold Project.
Winshear can provide no assurance that the Tanzanian government will favour Winshear’s claims to the defined SMP Project resource areas and cautions that other companies and individuals have submitted applications and bids for licences over Winshear’s resource area.