Workers on site at Maumba where Base Resources plans to construct a dam. AG has said titanium miner is not legally bound to sell a 35 pc to local investors. Photo/File
What you need to know:
AG said Base Resources is not legally bound to sell a 35 per cent to local investors, the miner’s full ownership of mining rights for the Kwale titanium deposits.
The backing by Mr Muigai means that the October 2012 gazette notice by Environment and Mineral Resources minister Chirau Ali Mwakwere will not affect the company.
Mr Muigai said the Australian firm is not legally bound to sell a 35 per cent to local investors, the miner’s full ownership of mining rights for the Kwale titanium deposits.
The backing by the Attorney General means that the October 2012 gazette notice by Environment and Mineral Resources minister Chirau Ali Mwakwere will not affect the company.
“Base Resources is pleased to advise that it has received formal notification that the Attorney General of Kenya has determined that the recently introduced 35 per cent Local Equity Participation Regulation (‘the Regulations’) cannot be applied to the Special Mining Lease No. 23 covering the Company’s 100 per cent owned Kwale Mineral Sands Project,” said the firm’s statement released on Friday.
The AG’s advice is, however, set to stoke even more controversy over the local ownership rule, which saw Base Resources petition the Treasury when it was first gazetted late last year.
Acting Commissioner for Mines and Geology Moses Masibo later said in an interview with our sister paper the Daily Nation that the new regulations would be reviewed to avoid “affecting investments.”
Mr Mwakwere last week withdrew three other licenses held by Base Resources for titanium mining in the coastal area, which the Australian firm has vowed to challenge in court. The firm said in the Friday statement that Mr Muigai’s letter had affirmed its victory in the row with Mr Mwakwere.
“The AG’s advice that the regulations can only be applied to mining licenses issued after the regulation came into force, being October 12, 2012, corroborates the legal advice previously received by Base in this respect,” said the statement.
The legal backing will spare the listed firm from having to look for local investors to buy a 35 per cent stake, which would have had to take place within the next five years, according to the gazette notice by Mr Mwakwere.
Base Resources shareholders were the beneficiaries of the announcement after shares in the listed company surged by 38 per cent to Australian $0.35 (Sh32) from Australian $0.28 after the announcement.
Mr Mwakwere’s announcement requiring firm’s to cede at least 35 per cent ownership to locals had seen the share price drop by 50 per cent to Australian $0.28 (Sh25.68).
“Due to the uncertainty caused by the 35 per cent local equity participation rule, the market price is less than half that at which most of our global investors became shareholders,” said Base Resources CEO Tim Carstens in December.
For the 35 per cent to be implemented it would have required that Kenyan investors pump between $75 million (Sh6.5 billion) and $100 million (Sh8.68 billion).
