Montero Mining settles with Tanzania for US$27M

Montero Mining and Exploration (TSXV: MON) has agreed to settle its dispute with Tanzania over the Wigu Hill rare earth element project for US$27 million, to be paid in three instalments. This amount is far less than the damage it had been seeking through arbitration proceedings.

“We wish Tanzania success in attracting new mining investments and look forward to receiving the final two payments due within the next five weeks,” Montero CEO Tony Harwood said in a release on Tuesday, referring to the US$27 million settlement.   

Of the amount, the company will only receive around half of that (US$14.5 million) after paying its funders and legal costs.

In January 2021, the company filed a request for arbitration with the International Centre for Settlement of Investment Disputes over the “unlawful expropriation and mistreatment” of its investment in Tanzania. It later submitted a claim for US$90 million.

The dispute relates to the validity of Montero’s renewed licence on the Wigu Hill project, which was cancelled in 2018 under a new mining code that did not recognize the “retention licence” classification. The company first began exploring the property in 2008 under a prospecting licence and was later granted the retention licence in 2015.

In late 2019, Tanzania’s mining commission announced a public invitation to tender for the joint development of areas previously covered by retention licences, including the area of the Wigu Hill. This essentially deemed the Wigu Hill project “valueless” to Montero.

The company said it has since made repeated attempts to work with Tanzanian government to reach an amicable settlement, while the discovery and development of the Wigu Hill project “has created significant value for Tanzania.”

“Acting in good faith, Montero made several attempts to settle the dispute over Wigu Hill with the Tanzanian government but without success,” Harwood said in a news release in November 2021.

Montero is one of a number of companies that have filed arbitration procedures with ICSID against Tanzania for the expropriation of retention licences. In 2023, Indiana Resources (ASX: IDA) won an award of US$109.5 million, while Winshear Gold (TSXV: WINS) settled for US$30 million the same year.

The mining company’s sole focus now is the Avispa copper-molybdenum project in Chile, for which it is seeking a joint venture partner.

Shares of Montero Mining and Exploration rose 3.2% to 32¢ apiece by midday Tuesday on the settlement announcement. Its market capitalization stands at $15.6 million.