Migori gold miner wins first round in case against Balala

A Migori-based gold mining firm has got temporary relief after the High Court stopped the revocation of its exploration licence by Mining secretary Najib Balala.

Mid Migori Mining Company and its London Stock Exchange-listed affiliate, Red Rock Resources, had sued Mr Balala and the commissioner of mines and geology over what they termed as the unlawful revocation of their special licences.

Mid Migori has been exploring for gold in a joint venture with Red Rock. They claim to have invested Sh1.5 billion in the venture.

While the Kenyan company is the holder of the licences, the London affiliate has invested capital for prospecting after acquiring 15 per cent shareholding from Kansai Mining Corporation, which was the first parent company.

Justice George Odunga also issued orders stopping the minister from gazetting the revocation of the licences.

Gazettment of the revocation would allow for reallocation of the licences to third parties before the matter is heard and determined.

“In order to arrest this matter from escalating, it ought to be heard urgently on a priority basis. I issue orders preventing entrance of third parties through gazette notice so that the dispute can be heard and determined objectively,” he said.

According to court documents, Mr Balala in a letter dated April 20 revoked the special licences Numbers 122 and 202 that entitled Midrock and its affiliates to prospect for gold in designated locations in Migori.

The first licence was issued to the gold mining company by the commissioner of mines and geology in April 1988 and the second licence given in October 1995.

READ: Balala revokes licences of 65 mining companies

Through their lawyer Njoroge Regeru, the two firms told the court that the minister had revoked their licences without giving them an opportunity to show why the licences should be maintained.

“The immediate decision maybe gazetted at any time by the minister and if that happens, the prospecting sites would become available for allocation to third parties who will get embroiled in the validity and legality of the decision,” he told Justice Odunga.

Mid Migori said in court documents that they had applied for a mining licence in August 2012, but the progress of the application process stalled due to the electioneering period, after which the ministry ignored letters and discussions referring to the application.

The firm also says that they have made payments for machinery, labour, tax royalties and other costs related to operations between 2009 and 2015, investing about Sh1.5 billion (10 million pounds) in the prospecting activities over the past seven years.

Mr Regeru told the court that the ministry had initially written to the firm on January 6 with a termination notice asking them to give reasons why their licences should not be revoked, on grounds that they had not shown any progress toward finalisation of feasibility study and had not applied for a mining lease as per its quarterly report of May to June 2014.

“We responded on the basis of the two allegations and were waiting for the Cabinet secretary to come back and say whether we have satisfied the threshold or not, but he responded revoking the licence on eight separate grounds,” he said.

The mining company said in court documents that the letter from the ministry dated April 20 that the decision to cancel the licences was informed by recommendations from the Ministerial Licensing and Advisory Committee meeting held on April 8.

Mr Regeru said that the minister chairs the advisory committee, which constitutes junior officials from the ministry, and is in a prime position to influence any findings made by the committee.

The firm was given seven days to file and serve the Cabinet secretary and the commissioner of mines.