Rome Resources settles claims against Mozambican government

Rome Resources (), the DRC-focused tin and base metals explorer, has entered into a settlement agreement with former Rome subsidiary IM Minerals Limited and the Mozambique government in relation to the company's legacy claim over the expropriation of a heavy mineral sand mining concession 4623C in 2011.

The expropriation occurred when Rome was called Pathfinder Minerals.

As part of the Settlement, the Mozambique government has agreed to grant five new research and exploration licences to a registered Mozambican company (or companies) to be nominated by IM. Rome will receive a 30% carried interest in the future value of the new licences.

The claim was sold by Pathfinder to Acumen Advisory Group LLC by way of a sale in 2023 of the company's wholly owned subsidiary, IM. 

The claim was subsequently sold by Acumen to Luangwa Resources LLC in January 2024.

Since then, and during the course of negotiations it became apparent that the Mozambican government justified the expropriation of mining concession 4623C on the basis of purported failures by the company's previous management to put in place sufficient safeguards prior to the expropriation. 

This resulted in a perceived weakening of the claim. Consequently, the Mozambique government did not offer a cash settlement, resulting in a subsequent period of further negotiation over a number of replacement new licences which was ultimately offered in lieu of a cash settlement. 

The new licences are prospective for graphite and heavy mineral sands and cover in aggregate approximately 59,733 hectares, which is equivalent to an area the size of the Isle of Man.

Two of the licences that form part of the new licence areas are extensions of active graphite mining projects and are anticipated to be the subject of an early marketing campaign to generate cash returns for Luangwa. 

The remaining three licences will require further technical work to mature the projects to marketable status.

Under the terms of a side agreement entered into with Luangwa following the settlement, Rome will receive a fixed 30% carried interest in either the individual entities holding each licence or the holding company that ultimately holds the new licences.  

The Company has agreed with Luangwa that if any value in the new licences is realized through either a disposal, share sale, listing or a farm-in agreement, then if the aggregate amount of cash available for distribution following such event is less than US$7 million, Luangwa's reasonable costs up to a maximum of US$2 million shall be taken into account prior to any cash distribution to the company. In the event that the distributable cash available is greater than US$7 million, then these costs will not be taken into account.

Shareholders in Rome as at 6:00pm on 5 September 2023 will be entitled to a "Bonus Preference Share" entitling the holder to receive, subject to the Companies Act 2006, a preferential dividend equal to the damages award that the company may receive pursuant to the claim. 

"The settlement gives the legacy shareholders, most promisingly through the graphite licences, a potential route to monetary compensation for the claim and Luangwa have assured the Company that they will seek to create a liquidity event as soon as practicable,” said Paul Barrett, chief executive of Rome Resources.

“I must emphasise that the company will not be investing financial capital into this project, and the exploration for tin and copper at the Bisie North site in the DRC remains our single focus going forward. In this regard, I look forward to updating shareholders on progress relating to grades and volumes in the Bisie North project in the near future."

View from Vox

It’s nice to get this legacy issue tidied up to the point where value might come back into the company, but the main event continues to be the excellent grades that have been delivered by the substantial drill programmes in the Democratic Republic of Congo.