Arrowhead Resources Ltd. (formerly Gippsland Ltd.) has released its annual report which includes details of an alleged expropriation of the Abu Dabbab Tantalum-Tin-Feldspar project from the company by the Egyptian government earlier this year.
Arrowhead Resources had a 50% interest in the Abu Dabbab project through its subsidiary, Tantalum International Pty Ltd. The other 50% was acquired by the Egyptian government in March 2015 through the Egyptian Company for Mineral Resources (ECMR) in return for committing US$ 7 million in investment. This money was intended as capital funding for the first stage of the project’s “400k plan”, a multi-staged mine development strategy that could have been producing tin and tantalum within a 12 month period.
However, on 26 March 2015, the company discovered that ECMR were seeking to dissolve the joint venture. ECMR subsequently claimed that the company had abandoned the project, which is strongly denied by Arrowhead, which has spent US$ 30 million on the project’s development to date, but ceased funding activities when ECMR became unresponsive. The company believes regaining control of any of its Egyptian assets to be highly improbable and therefore likely that compensation will be sought through legal channels.
The company changed its name on the 29th September and is undergoing financial reconstruction and recapitalisation while it seeks to acquire a new mine project to develop.
ITRI View: These developments have stalled progress at the Abu Dabbab project and may result in mine construction being pushed back by several years as the government seeks a new partner for the project. As of yet there has been no public interest from any third party in taking over the project and the potential for a protracted legal dispute may contribute to delaying project completion.
