Mr. Eric Edwards reports
TRIMETALS MINING INC.'S SUBSIDIARY, SOUTH AMERICAN SILVER, AWARDED APPROXIMATELY US$28 MILLION (INCLUDING INTEREST) IN ARBITRATION PROCEEDINGS AGAINST THE GOVERNMENT OF BOLIVIA
On Nov. 22, 2018, an arbitration tribunal of the Permanent Court of Arbitration in The Hague, Netherlands, issued an award awardingTrimetals Mining Inc.'s wholly owned Bermudan subsidiary, South American Silver Ltd., $18.7-million (U.S.) in amounts invested and approximately $9-million (U.S.) in interest thereon running from Aug. 1, 2012, to present, for a total of approximately $28-million (U.S.). The award relates to South American Silver's claims against the Plurinational government of Bolivia arising from Bolivia's unlawful expropriation of South American Silver's investments in the Malku Khota silver-indium-gallium project.
South American Silver, which the majority of the tribunal confirmed to be a protected investor under the bilateral investment treaty between the government of the United Kingdom and Bolivia for the promotion and protection of investments, despite Bolivia's objections to jurisdiction and the dissent of the arbitrator appointed by Bolivia in this regard, commenced formal arbitration proceedings on April 30, 2013, under the arbitration rules of the United Nations Commission on International Trade Law in respect of Bolivia's breaches of the treaty, including the requirement to pay prompt, just and adequate compensation for the unlawful expropriation of the Malku Khota project, provide fair and equitable treatment to South American Silver's investment, and provide full protection and security to foreign investors and their investments.
On May 23, 2013, the company entered into an agreement with a third party financer to finance South American Silver's future costs and expenses related to the arbitration proceedings. The fund specializes in the financing of international arbitration proceedings and in providing assistance with the enforcement of arbitration awards. This non-brokered financing was made on a non-recourse basis and includes costs and expenses of the enforcement of any award rendered by the arbitration tribunal. In consideration for the financing, the company and South American Silver will pay to the finance a portion of the monies received from Bolivia resulting from the award.These fees, costs and expenses willpotentially reduce funds received by South American Silver by as much as one-third of the amount of the award.
Holders of the company's Class B shares have a collective entitlement to 85 per cent of the net cash (after deducting all costs, taxes and expenses, and the fund's portion thereof), received by the company from the award.
Eric Edwards, president and chief executive officer of the company, stated: "We are disappointed at the outcome of the international arbitration process and especially with the quantum of damages awarded to South American Silver, which we consider insufficient and are still evaluating.Given the more than two years the tribunal spent considering the evidence and drafting the award, including detailed damages calculations and technical evidence presented by renowned quantum and mining experts, regarding the size and quality of the massive deposit at Malku Khota and fair market value of the expropriated asset, we certainly expected a more properly reasoned, just and fair outcome, and an adequate amount of compensation as opposed to simply awarding amounts invested or 'sunk costs' resulting from Bolivia's illegal conduct.We are still evaluating the award and its contents in order to consider next steps, including, among other things, seeking annulment of the award or enforcement under the New York Convention should Bolivia refuse to pay or unduly delay payment of the amounts due and owing."
The company notes that one of the three arbitrators on the tribunal, Prof. Francisco Orrego Vicuna (now deceased), strongly disagreed with the opinion set out in the award and stated that he believed, among other things, the tribunal placed too much of the blame for any issues with the indigenous communities upon South American Silver when it is Bolivia that is responsible for maintaining public order.He also stated there was evidence that Bolivia wanted to take over the Malku Khota project before any social unrest arose and expressed the view that South American Silver was not afforded due process which was, in his view, "reduced to mere symbolism devoid of objective review."
The company also notes that Prof. Orrego Vicuna believed the tribunal should have found a violation of the fair and equitable treatment obligation and a failure to provide full protection and security to South American Silver's investment.Most troubling is his view that this resulted "in compensation well below that suggested by information available and the experts' and valuators' reports" (indeed the company notes that the government of Bolivia has stated, in its announcement regarding the award, that the state now owns the Malkhu Khota deposit, which Bolivia valuesat $8-billion (U.S.), despite arguing during the arbitration that South American Silver's $307.2-million valuation of the Malku Khota project was exaggerated).Nevertheless, Prof. Orrego Vicuna felt the need to vote with the presiding arbitrator in order to avoid the award remaining "in a state of suspension or hibernation, without the presiding arbitrator being able, under the UNCITRAL rules, to decide without a majority."
About Trimetals Mining Inc.
Trimetals Mining is a growth-focused mineral exploration company creating value through the exploration and development of the near-surface, oxide, heap-leachable Gold Springs gold project in mining-friendly Utah and Nevada, in the United States, and the Escalones copper-gold skarn/porphyry deposit in Chile. The company combines a record of discovery and advancement of large projects, mining and exploration supportive jurisdictions, low-political-risk areas, key operational and process expertise, and a focus on community relations and sustainable development. Management has extensive experience in the global exploration and mining industry.
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