The National Minerals Agency (NMA) and the Mines Ministry (MMMR) have in a press release issued Friday 18th October, disclosed that the Government of Sierra Leone (GOSL) “has cancelled the Large-Scale Mining Licenses of Marampa Iron Ore Limited (ML 05/2014) and SL Mining (ML 01/2017) effective 11th September 2018 and 4th October 2019 respectively.” The reasons given according to the release is that the “Mineral Rights Holders respectively breached their statutory obligations under the Mines and Minerals Act of 2009 and/or the applicable Mining Lease Agreement.” It will be recalled that the GOSL suspended the export of Iron Ore by SL Mining alleging breaches of its license. This followed reaction by SL Mining threatening that it would seek international arbitration in a very “foul” letter accusing the GOSL of “extortion.” Apparently each side presented their negotiating positions.
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The GoSL position entering into the ‘Settlement Discussion’ with SL Mining (SLM) officials back in September were that the GOSL, does not want to consider the corruption investigation as part of the settlement discussions, and is willing to consider lifting the export ban. Also that the GOSL does not want the mine to go into care & maintenance (C&M). The GoSl also asked that SLM must put in place an advanced pricing agreement, regardless if there are affiliate sales or not. Further that SLM should retract its negative public statements regarding Executive Order No 1. The SL Mining on their own side presented two positions which were based on If GoSL unconditionally lift the export ban and secondly a full settlement of all outstanding issues. Under option ‘A’ SLM maintained: – (1) GoSL must unconditionally lift export ban and SLM to resume full operations without any issue. (2) GoSL shall issue a letter stating that SLM is now in full compliance with its MLA and all related SL Laws. (3) SLM will retract its negative public statements regarding Executive Order No 1. (4) SLM will resume shipping immediately and NOT put the entire operation into C&M (5) SLM will enter into an advanced pricing agreement for affiliated sales on a good faith basis, based on internationally accepted arm’s length principles. (6) SLM will continue to comply with all laws of SL and reasonable requests regarding compliance (7) The export ban must be lifted prior to SLM going into C&M, which will normally happen this Wednesday 11th of September. Under Option ‘B’ SLM maintained “(1) GoSL must unconditionally lift export ban and SLM to resume full operations without any issue. (2) GoSL must complete corruption investigation and clear SLM, Gerald, and its officers of any so called charges and never again attempt to reopen anything prior to the date of the settlement regarding corruption. (3) GoSL shall issue a letter stating that SLM is now in full compliance with its MLA and all related SL Laws. (4) SLM will retract its negative public statements regarding Executive Order No 1 (5) SLM will resume shipping immediately and NOT put the entire operation into C&M due to the current situation. (6) SLM will enter into an advanced pricing agreement for affiliated sales on a good faith basis, based on internationally accepted arm’s length principles. (7) SLM will continue to comply with all reasonable requests regarding compliance. (8) GoSL will enter into negotiations with the receiver of Timis Mining Corporation (SL) Limited / and SL Mining in order to finalize the settlement and royalty agreements already reached with the historic lenders and SL Mining. (9) SL Mining shall not be required to perform the Phase II workplan or any further expansion of Marampa beyond the current operational status prior to the Suspension letter, until the MLA is renegotiated on mutually acceptable terms. (10) The current MLA is binding on the current operations (with the exclusion of the Phase II workplan or any further expansion) until any new MLA may be put in place. GoSL agrees to honour the current MLA without interruption or frustration from any GoSL authorities, including the SLPA, SLMA, NRA, and so who are or have attempted to claim that SL Mining is not exempt from certain taxes, fees, or other levies as currently documented. SL Mining requires uninterrupted stability on all provisions of the current MLA until such time that any new MLA is entered into on mutually acceptable terms (if agreement is reached between the parties). (11) The GoSL undertakes to not invoke Section 52 of the Mines and Minerals Act 2009, in all circumstances, without providing prior written notice and a reasonable period to remedy the specific situation in question if a reasonable remedy period is available. (12) The GoSL undertakes and agrees that in all circumstances as noted in clause 6.10 of the MLA, SL Mining is afforded a minimum of 6 months prior written notice to remedy any default that could lead to a cancellation of its license. This is already documented in clause 6.10 of the current MLA, however SL Mining believes an amendment is necessary to clarify that clause 6.10 already provides a 6-month grace for missed payments on rent or royalties to not have any interpretation. (13) SL Mining to stay its legal proceedings once all terms of the above have been documented and put into an enforceable settlement agreement. (14) GoSL to comply with all orders issued by the emergency arbitrator or any arbitrator in the future without the need to enforce such orders, unless SL Mining and the GoSL otherwise mutually agree something different. Any such agreement, to be recorded in writing and signed by the parties. If either party does not comply with orders issued, then a penalty and liquidated damages shall accrue and become immediately due. In addition, SLM will have the immediate right to offset such damages against any taxes, fees, or other payments due or may become due to the GoSL. (15) The arbitration clause set out in clause 6.9 of the current MLA shall apply as if restated and set out herein expect with the express deletion of the words “within a period of 3 (three) months from a written notice by one party to the other party specifying the nature of the dispute and seeking an amicable settlement,” in clause 6.9 c). (16) SLM will waive damages from the losses of the suspension and export ban. This offer will be withdrawn by Tuesday 10 th of September 2019 5pm Freetown time if GoSL does not confirm its willingness to settle under option B. (17) SLM will make prepayment of $2.5 million for other taxes, fees, and any GoSL related payments, but excluding royalties. SLM is willing to do this to demonstrate its goodwill to settle all claims and demonstrate that SLM pays other substantial taxes, fees, levies and so on to the GoSL. This prepayment will be reduced by these other amounts. This offer will be withdrawn by Tuesday 10 th of September 2019 5pm Freetown time if GoSL does not confirm its willingness to settle under option B. This discussion apparently broke down, and the GoSL has now officially cancelled the License of SL Mining which is owned by Gerald Minerals
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