Panthera issues update on Bhukia dispute, secures litigation funding

Gold explorer and developer Panthera Resources updated the market on the ongoing dispute with the Republic of India over the Bhukia project on Wednesday, confirming that it had secured litigation financing for the dispute.

The AIM-traded firm said the dispute centred on India's alleged breaches of obligations under the 1999 agreement between the governments of Australia and India on the promotion and protection of investments.

It said the government of Rajasthan (GoR) recently announced the preferred bidder for the Bhukia-Jagpura block, which includes the Bhukia project, with a ‘highest final price offer' of 65.3%.

That percentage refers to the value of minerals dispatched each month, multiplied by the sale price of the mineral as published by the Indian Bureau of Mines.

The Geological Survey of India (GSI) reported a mineral resource of 7.15 million ounces of gold in the Bhukia project, valued at about $16.7bn based on recent gold prices.

For the preferred bidder to qualify for the mining lease, they would need to make an upfront payment and provide a performance security, each amounting to around $60m.

Panthera said it believed the mineral resource potential of Bhukia exceeded the GSI's reported estimates, based on earlier work and subsequent evaluations.

Its subsidiary Indo Gold (IGPL) holds legal rights to the Bhukia area through Metal Mining (MMI), which had its prospecting licence application rejected by the GoR in August 2018.

Despite IGPL's substantial investment and management of exploration programmes since 2005, the GoR had consistently frustrated IGPL's right to a prospecting licence, citing various legally untenable grounds, Panthera explained.

It said India's new Mines and Minerals Development and Regulation Act of 2021 (MMDR2021) had further complicated the issue by lapsing preferential rights to prospecting licences and mining leases, though it included provisions for reimbursement of expenditures.

IGPL was arguing that under the treaty, it was entitled to fair and equitable compensation, not merely reimbursement.

The company said the acts and omissions by the GoR and India, including the MMDR2021 enactment and the rejection of MMI's writ petition, constituted breaches of the treaty, particularly articles three, four and seven, which cover the promotion and protection of investments, the treatment of investments, and expropriation and nationalisation.

IGPL was planning to seek damages from India, although the outcome of the treaty claims remained uncertain.

Panthera said its exploration at Bhukia revealed significant gold resources, with early estimates indicating 1.74 million ounces.

The GSI's 2014 report and subsequent updates suggested even larger resources, reinforcing Bhukia's potential for a large, low-cost, open-pit gold mining operation.

To support its legal efforts, IGPL had secured up to $13.6m in litigation financing from LCM Funding SG, a subsidiary of Litigation Capital Management.

The non-recourse facility would fund IGPL's prosecution of its treaty claims against India, with repayment contingent on achieving an award or recovery.

At 1238 BST, shares in Panthera Resources were up 27.98% at 7.17p.

Reporting by Josh White for Sharecast.com.