First Majestic Initiates Arbitration Against Mexican GovernmentBy Paloma Duran | Thu, 03/04/2021 - 17:58
First Majestic has submitted a request for international arbitration on its own behalf and Primero Empresa Minera’s (PEM), its subsidiary in Mexico, under Chapter 11 of the North American Free Trade Agreement (NAFTA). The company explained that the Mexican government has not responded well to the previous attempts to solve its problems with the company and as a result, First Majestic is requesting to have a neutral, international and independent arbitration tribunal to settle the dispute.
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First Majestic Silver has initiated arbitration proceedings against the Mexican government, which recently requested the company to pay US$500 million due to owed taxes. Company officials explained that the Federal Court ordered the annulment of the Advance Price Agreement, which since 2012 has allowed First Majestic to pay taxes at a lower rate in Mexico. However, the Mexican Revenue Service (SAT) claims that the company owes a debt due to missing taxes from 2010 to 2018.
In 2020, First Majestic warned Mexican authorities its intention to request the help of the International Centre for Settlement of Investment Disputes. However, the company states that Mexican authorities have not committed and, as a result, the company has filed a request for international arbitration based on NAFTA’s Chapter 11.
Fresnillo reported an increase in its 2020 pre-tax profit due to strong gold and silver prices. However, it will remain cautious due to the COVID-19 pandemic situation in Mexico. In 2020, Fresnillo cut its annual gold production outlook twice due to COVID-19 restrictions, which affected primarily its Herradura and Noche Buena mines. “Given the ongoing pandemic, there is a relatively high degree of unpredictability about the year ahead, so we are cautious,” CEO of Fresnillo, Octavio Alvídrez, said.
Fernando Alanis, President of CAMIMEX, said the growing uncertainty related to government policies around permitting and concessions could cause companies to shift new investments to more attractive countries like Peru and Chile. Alanis said he expects investment in the Mexican mining sector in 2021 to remain at 2020 levels, which is around US$2.8 billion. Alanis emphasized that new concessions are needed to revert this situation and that the new Minister of Economy, Tatiana Clouthier, should supports this idea. "If no new concessions are granted, there is no exploration. If there is no exploration, the future of mining is simply in doubt," Alanis said.
Southern Silver Exploration’s Cerro Las Minitas project is considered one of largest undeveloped silver projects in the world. The project is located in Durango and has been managed by the company since it purchased its partner, Electrum Global Holdings in 2020. The company recently announced its intention to make the project bigger in the upcoming years. Cerro Las Minitas is a polymetallic sulphide deposit and has resources worth 272Moz of silver equivalent. In addition, “there are indicated resources of 134Moz at a grade of 375g/t of silver and inferred resources containing 138Moz at a grade of 334g/t,” reported Mining.com.
The Sonora Lithium project is the first massive lithium extraction project in the country and it is set to begin operations in 2023. The project will be supervised by Bacanora Lithium, which owns 77.5 percent of the project, while the remaining 22.5 percent belongs to its Chinese partner Ganfeng Lithium. The US$420 million project covers a massive 100,000ha in Sonora and lithium production is expected to be at around 17,500 tons. The Sonora Lithium project is expected to be groundbreaking for Mexico and as a result, Morena has introduced legislative motions that aim to nationalize the emerging lithium mining industry restructuring the rights of concessions, which could lead to skyrocketing lithium prices.
Sonoro Gold Corp. announced the bottle roll results from its Cerro Caliche project in Sonora. The tests were carried out in four specific mineralized zones: Japoneses, Cuervos, El Colorado/Cabeza Blanca and Buena Suerte. These tests were conducted at McClelland Laboratories and are part of a detailed scope of 43 bottle roll tests. Leach recoveries averaged 80.3 percent for gold and 27.2 percent for silver. Sonoro’s President and CEO, Kenneth MacLeod, said “the successful completion of these tests is an important advancement of the Cerro Caliche project and will contribute towards the completion of the NI 43-101 PEA that is expected to be released in 3Q21.”