Petaquilla Minerals Ltd. responds to the news release made yesterday by Inmet Mining Corporation ("Inmet") about the rights of Inmet's subsidiary, Minera Panama, S.A. ("MPSA"), in relation to the Cobre Panama copper project.
Inmet's release is yet another example of attempts to confuse the shareholders of Petaquilla about Petaquilla's clear rights to the Rio San Juan and La Esperanza concessions on which Inmet finally acknowledges it plans to build a significant portion of its tailings facility for the Cobre Panama Project.
Inmet makes no mention of the decision of the National Authority of Land Administration ("ANATI") of the Government of Panama dated October 18, 2012, that was the subject of Petaquilla's news release of October 22, 2012. MPSA had applied to ANATI to lease from the Government of Panama over 7,500 hectares of land adjacent to the MPSA Concession, including lands falling within the Rio San Juan and La Esperanza concessions.
In responding to MPSA's application, with input from the Panamanian National Directorate of Mineral Resources, ANATI ruled on a number of key issues, including:
- in order for MPSA to exercise the privilege provided to it in the 1997 Petaquilla Law, Contract Law No. 9, to obtain from the Government of Panama a lease of lands, it is a precondition that such lands be available for lease;
- by virtue of Annex IV of Law 9, lands that are subject to either mineral concession rights or applications for mineral concessions by Petaquilla are not available for lease by MPSA; and
- consequently, MPSA is not entitled to the lease it has requested from the Government of Panama relating to lands subject to Petaquilla's concession rights and applications for concession rights, including the Rio San Juan and La Esperanza concessions.
In its ruling, ANATI directed MPSA to negotiate with Petaquilla for a friendly agreement for access to such lands, failing which MPSA's sole alternative would be to pursue a resolution through private arbitration with Petaquilla, as provided for in Law 9.
Inmet's entire argument in its recent news release that it has the right to construct its tailings facility on the grounds that Petaquilla has not been granted full concession rights, but only made applications for concession rights, fails completely to acknowledge the special regime for concession applications by Petaquilla established by Annex IV of Law 9 and the ruling of ANATI in Petaquilla's favour confirming the meaning of that regime.
MPSA cites Annex IV as giving it the right to build Cobre Panama infrastructure, such as the proposed tailings facility, on "Adjacent Concessions". However, that right is conditional upon proof that such areas do not contain mineralization that can be safely and economically extracted. Inmet claims that it has provided Petaquilla with drilling results for the area on which the tailings facility for Cobre Panama is to be developed which indicate that there is no mineralization of economic value in this area. Petaquilla is of the view that the drilling results are completely inadequate in that the drill holes were far too shallow and too far apart to provide any reasonable evidence of the absence of mineralization of economic value. If MPSA is not able to negotiate a resolution of this matter with Petaquilla, MPSA's only option is to have the matter arbitrated. Petaquilla is of the view that, given the complexity of the issues involved, any arbitration would take as long as two years to be completed.