TriMetals Mining Inc.’s Subsidiary, South American Silver, Awarded Approximately US$28 million (including interest) in Arbitration Proceedings against the Government of Bolivia
TriMetals Mining Inc.’s Subsidiary, South American Silver, Awarded
Approximately US$28 million (including interest) in Arbitration Proceedings
against the Government of Bolivia
DENVER, Nov. 23, 2018 -- TriMetals Mining Inc. (TSX: TMI) (OTCQX:TMIAF), (the “Company”), announces that on
November 22, 2018, an Arbitration Tribunal of the Permanent Court of Arbitration in The Hague, Netherlands, issued an award
awarding the Company’s wholly-owned Bermudan subsidiary, South American Silver Limited (“South American Silver”)
US$18.7 million in amounts invested and approximately US$9 million in interest thereon running from August 1, 2012 to
present, for a total of approximately US$28 million (the “Award”). The Award relates to South American Silver’s claims against
the Plurinational Government of Bolivia (“Bolivia”) arising from Bolivia’s unlawful expropriation of South American Silver’s
investments in the Malku Khota silver-indium-gallium project (the “Malku Khota Project”).
South American Silver, which the majority of the Tribunal confirmed to be a protected investor under the bilateral investment
treaty between the Government of the United Kingdom and Bolivia for the Promotion and Protection of Investments (the
“Treaty”), despite Bolivia’s objections to jurisdiction and the dissent of the arbitrator appointed by Bolivia in this regard,
commenced formal arbitration proceedings on April 30, 2013 under the Arbitration Rules of the United Nations Commission on
International Trade Law (“UNCITRAL”) in respect of Bolivia’s breaches of the Treaty, including the requirement to pay prompt,
just and adequate compensation for the unlawful expropriation of the Malku Khota Project, provide fair and equitable treatment
to South American Silver’s investment and provide full protection and security to foreign investors and their investments.
On May 23, 2013, the Company entered into an agreement with a third-party funder (the “Fund”), to fund South American
Silver’s future costs and expenses related to the arbitration proceedings. The Fund specializes in the funding of international
arbitration proceedings and in providing assistance with the enforcement of arbitration awards. This non-brokered funding was
made on a non-recourse basis and includes costs and expenses of the enforcement of any award rendered by the Arbitration
Tribunal. In consideration for the funding, the Company and South American Silver will pay to the Fund a portion of the monies
received from Bolivia resulting from the Award. These fees, costs and expenses will potentially reduce funds received by
South American Silver by as much as one-third of the amount of the Award.
Holders of the Company’s Class B shares have a collective entitlement to 85% of the net cash (after deducting all costs, taxes
and expenses and the Fund’s portion thereof), received by the Company from the Award.
Eric Edwards, President and CEO of the Company stated, “We are disappointed at the outcome of the international arbitration
process and especially with the quantum of damages awarded to South American Silver, which we consider insufficient and
are still evaluating. Given the more than two years the Tribunal spent considering the evidence and drafting the award,
including detailed damages calculations and technical evidence presented by renowned quantum and mining experts,
regarding the size and quality of the massive deposit at Malku Khota and fair market value of the expropriated asset, we
certainly expected a more properly reasoned, just and fair outcome and an adequate amount of compensation as opposed to
simply awarding amounts invested or “sunk costs” resulting from Bolivia’s illegal conduct. We are still evaluating the award
and its contents in order to consider next steps, including, among other things, seeking annulment of the award or
enforcement under the New York Convention should Bolivia refuse to pay or unduly delay payment of the amounts due and
owing.”
The Company notes that one of the three arbitrators on the Tribunal, Professor Francisco Orrego Vicuña (now deceased),
strongly disagreed with the opinion set out in the Award and stated that he believed, among other things, the Tribunal placed
too much of the blame for any issues with the indigenous communities upon South American Silver when it is Bolivia that is
responsible for maintaining public order. He also stated there was evidence that Bolivia wanted to take over the Malku Khota
Project before any social unrest arose and expressed the view that South American Silver was not afforded due process which
was, in his view, “reduced to mere symbolism devoid of objective review.”
The Company also notes that Professor Orrego Vicuña believed the Tribunal should have found a violation of the Fair and
Equitable Treatment Obligation and a failure to provide Full Protection and Security to South American Silver’s investment.
Most troubling is his view that this resulted “in compensation well below that suggested by information available and the
experts’ and valuators’ reports” (indeed the Company notes that the Government of Bolivia has stated, in its announcement
regarding the Award, that the State now owns the Malkhu Khota deposit which Bolivia values at US$8 billion, despite arguing
during the arbitration that South American Silver’s $307.2 million valuation of the Malku Khota Project was exaggerated).
Nevertheless, Professor Orrego Vicuña felt the need to vote with the Presiding Arbitrator in order to avoid the Award remaining
“in a state of suspension or hibernation, without the Presiding Arbitrator being able, under the UNCITRAL Rules, to decide
without a majority.”
About TriMetals Mining Inc.
TriMetals Mining Inc. (TSX: TMI and OTCQX: TMIAF) is a growth-focused mineral exploration company creating value through
the exploration and development of the near-surface Gold Springs gold-silver project in mining-friendly Nevada and Utah,
U.S.A.
The Company’s Class B shares are listed on the Toronto Stock Exchange under “TMI.B”. Note that the Class B shares have
no interest in the properties or assets of the Company other than the collective entitlement to 85% of the net cash after
expenses received by the Company from award or settlement in relation to South American Silver’s arbitration proceeding
against Bolivia for the expropriation of the Malku Khota project in 2012.
TriMetals Mining Inc. Contact:
Eric Edwards
President & CEO
303.584.0606
Forward-looking Statements
Certain statements contained herein constitute “forward-looking information” under applicable Canadian securities laws
(“forward-looking statements”). Forward-looking statements look into the future and provide an opinion as to the effect of
certain events and trends on the business. Forward-looking statements may include words such as “shall”, “will”, and similar
expressions. The statements regarding prompt payment and settlement of the compensation award owed by Bolivia are also
forward-looking statements. These forward- looking statements are based on current expectations and entail various risks and
uncertainties. Actual results may materially differ from expectations if known and unknown risks or uncertainties affect our
business or if our estimates or assumptions prove inaccurate. Factors that could cause results or events to differ materially
from current expectations expressed or implied by the forward-looking statements, include, but are not limited to, the prompt
settlement and payment of arbitration awards in a customary manner and in accordance with the Arbitration Tribunal’s final
decision, risks that settlement may not be reached with the Government of Bolivia regarding the arbitration award and
payment thereof, and other risks more fully described in the Company’s Annual Information Form and continuous disclosure
documents, which are available on SEDAR at www.sedar.com. The assumptions made in developing the forward-looking
statements include: the settlement and payment of arbitration awards in a customary manner and in accordance with the
Arbitration Tribunal’s final decision.
Readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release. Except
as required by law, the Company assumes no obligation to update or revise any forward-looking statement, whether as a result
of new information, future events or any other reason. Unless otherwise indicated, forward-looking statements in this press
release describe the Company’s expectations as of the date hereof.