Mining Weekly | 23rd October 2012
South American Silver notifies Bolivia of investment dispute
By: Henry Lazenby
TORONTO (miningweekly.com) – TSX-listed South American Silver (SAS) on Tuesday said it had notified the Plurinational State of Bolivia of an investment dispute between the company and Bolivia, after the company’s subsidiaries had lost its mineral tenements.
The company’s announcement sent its shares racing up 32.53% or 27 Canadian cents on a day when the Toronto bourse closed down 1.43%.
The dispute arose as a result of acts of the Bolivian government, including the issuance of Supreme Decree No 1308 on August 1. The decree revoked mining concessions held by Compania Minera Malku Khota, a fully owned subsidiary of SAS.
SAS said it was a protected investor under the bilateral investment treaty between the government of the UK and the government of Bolivia, and the actions of the Bolivian government were in violation of that treaty and of international law.
The company said the notification of the investment dispute triggered a six-month cooling-off period during which the disputing parties could negotiate a settlement.
If settlement could not be reached within the cooling-off period, SAS said it intended to file for international arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law claiming full compensation based on fair market value of the Malku Khota project.
"We had made significant investments in Bolivia leading to the discovery of the Malku Khota silver/indium/gallium deposit to which we added substantial value through the application of our exploration expertise and our unique processing technology.
“It is most unfortunate that development of the project has been cut short by the nationalisation of our concessions but we are confident that the international arbitration process gives us the means to recover the full value of our project,” SAS CEO Phillip Brodie-Hall said.
The company’s shares closed at C$1.10 apiece.