Montero Mining and Exploration has reached a settlement agreement with the Tanzanian government, ending a long-running dispute over the expropriation of its Wigu Hill rare earth element project.
The company, which had initially sought damages of C$90 million through international arbitration proceedings, will receive $27 million in three installments. This settlement marks a significant step forward for Montero, allowing it to move on from this protracted legal battle and focus on its core operations.
The dispute stemmed from the Tanzanian government’s cancellation of Montero’s retention licence for the Wigu Hill project in 2018. This decision, made under a revised mining code that did not recognize the validity of retention licences, effectively rendered the project worthless.
Montero, which had invested significant time and resources in exploring the Wigu Hill project since 2008, challenged this decision through international arbitration proceedings. However, despite numerous attempts to reach an amicable resolution with the Tanzanian government, a settlement remained elusive until now.
“Acting in good faith, Montero made several attempts to settle the dispute over Wigu Hill with the Tanzanian government but without success,” stated Tony Harwood, Montero’s CEO, in a previous company release.
This settlement follows similar outcomes for other mining companies that have faced similar challenges in Tanzania. Indiana Resources, for example, was awarded $109.5 million in arbitration proceedings, while Winshear Gold settled its dispute with the Tanzanian government for $30 million.
While the settlement provides a degree of closure for Montero, the company will only receive a portion of the $27 million after accounting for legal fees and payments to its funders.
“We wish Tanzania success in attracting new mining investments and look forward to receiving the final two payments due within the next five weeks,” Harwood stated.
Montero is now shifting its focus to its Avispa copper-molybdenum project in Chile, actively seeking a joint venture partner to advance the project’s development.
News of the settlement boosted Montero’s share price, which rose 3.2% on the TSX Venture Exchange. However, the company’s market capitalization remains relatively modest, reflecting the challenges it has faced in recent years.
This settlement underscores the complexities of operating in emerging markets and the importance of navigating regulatory and legal landscapes carefully. While the Tanzanian government has taken steps to attract new mining investment, the ongoing legal challenges faced by some companies highlight the need for a more predictable and investor-friendly regulatory framework.
For Montero, this settlement marks a turning point, allowing the company to move forward and pursue new opportunities in the mining sector.