Kincora Copper Limited announced that the Mongolian Ministry of Mining has proposed a “win-win solution” for all stakeholders to resolve disputes relating to the revocation of 106 mineral exploration licenses in late 2013.
The proposal, which follows constructive face to face discussions with the ministry, is expected to be presented as a resolution to the spring session of the Mongolian Parliament, which recently commenced.
Kincora is one of 11 foreign investors and 66 local groups impacted by the decision to revoke 106 licenses following a criminal court case involving former government officials, the company said.
Commenting on the announcement, Sam Spring, President and CEO of Kincora, said:
“This case has had a major, negative impact on investor sentiment towards Mongolia and the way in which the government responds to investor concerns about the revocation of licenses, we hope, will set a positive and visible precedent as to how future investors will be treated. Although Kincora has recently successfully raised capital to explore our flagship and unencumbered Bronze Fox project, uncertainty relating to the 106-license issue has significantly impacted investment and asset valuations in Mongolia, not just amongst those directly impacted by the 106.
“Kincora has been proactively working with the Ministry of Mining to achieve a win-win solution for all stakeholders and I very much believe the key concepts in the resolution put forward to the Mongolian Parliament will achieve that. The proposed resolution of the 106-license issue is probably the most transparent and tangible recent example of the Government of Mongolia, via the Ministry, working with investors to revive private sector activities, learn and move on from past mistakes acknowledging security of tenure. While Parliamentary approval is still required, a timely approval of the resolution, and its implementation, could support compliant former licenses holders undertaking field season activities this year.
“Kincora is in the advanced stages of mobilizing field season activities at our Bronze Fox project, noting the extremely competitive environment for service providers.”
Kincora said that resolving the 106-license case has been a priority for the Ministry since the issue came under its jurisdiction and it has been working together with impacted investors to resolve the matter. A case by case investigation of the impacted licenses has been conducted in support of a resolution that is to be presented to Parliament. The resolution recognizes the security of tenure and offers a proposed mechanism to compensate for the time lost due to the original judicial process and the returning of licenses back to compliant license holders. As such the proposed resolution is considered to be a “win-win outcome for all stakeholders.”
In its September 2013 quarterly accounts, Kincora wrote off 6,952,000 CAD relating to its Tourmaline Hills and North Fox licenses, which were revoked as part of the 106 case. Kincora’s two licenses were acquired from a private Canadian group in 2012, following full due diligence, and are lower priority exploration licenses adjacent to the flagship Bronze Fox project. Bronze Fox remains unencumbered and Kincora is in advanced stages of mobilizing activities there ahead of further exploration activities in the upcoming field season, the company said.
While the resolution still requires Parliamentary approval, it follows the approval of other recent positive legislative reforms such as the Investment Law, to promote private sector activity, said Kincora. The ministry is also proposing a number of other resolutions to be heard in the spring session of Parliament relating to the “Long Name Law,” revision of the tender regulation, which would see the three year moratorium for new exploration licenses lifted, and other amendments to the existing 2006 Minerals Law.
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