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SMP Gold Project Dispute in Tanzania Nears Conditional Settlement Agreement

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Canadian gold exploration firm, Winshear Gold Corp. (TSX-V: WINS), recently announced that they’ve reached a conditional settlement agreement with the Government of Tanzania, pausing their ongoing arbitration proceedings.

The root of this dispute traces back to Winshear, formerly known as Helio Resource, and its investment in the SMP Gold Project, situated along the Saza Shear Zone in the Lupa Goldfields of southwestern Tanzania.

Winshear initiated its exploration activities on this project in 2006. Through its Tanzanian subsidiary, the company secured four Retention Licences that covered the mineral resource areas.

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These licenses were valid for an initial five years, with an option for a five-year extension before the need to apply for a Mining Licence.

However, 2017 saw Tanzania making significant changes to the Mining Act 2010. A notable amendment was the elimination of the Retention Licence classification without introducing an alternative.

In January 2018, Tanzania introduced the Mining (Mineral Rights) Regulations 2018. According to this regulation, all retention licenses issued before January 10, 2018, were revoked.

As a result, rights to areas under these licenses, including the SMP project’s areas, transitioned to the Tanzanian government’s control.

Winshear contends that these legislative changes rendered the SMP Gold Project valueless. In January 2020, they submitted a Notice of Intent to the Tanzanian Attorney General, indicating their plan to arbitrate based on the 2013 Investment Protection Agreement between Canada and Tanzania.

This step formally recognized the investment dispute between Winshear and the Tanzanian government.

The arbitration proceedings occurred in February 2023, with an expected judgment within the following six months.

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The arbitration’s suspension aligns with a recommendation from Harold Sungusia, the Tanganyika Law Society (TLS) President. He suggested that Tanzania might achieve better outcomes through out-of-court settlements in such investment conflicts.

Winshear emphasizes that the finalization of this agreement isn’t guaranteed.

Other international ming companies are currently in litigation with the Government of Tanzania, having filed arbitration procedures due to the expropriation of Retention Licenses.

In June 2023, Indiana Resources Limited (ASX: IDA), was awarded USD 109.5 million in compensation for the unlawful expropriation of the Ntaka Hill Nickel Project in southern Tanzania.

Montero Mining & Exploration (TSX.V:MON) is claiming CAD 90 million in damages in relation to its Wigu Hill Rare Earth Element project in the Morogoro region of Tanzania.

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