NENDO BAUXITE PROJECT
The Nendo Bauxite Project (Nendo) located in the Solomon Islands (Figure 1) has demonstrated extensive areas of potentially high-grade DSO bauxite mineralisation (ASX announcement 27 September 2016). While much of the project area remains unexplored, the Company has delineated an initial priority target area of approximately 12 kilometres by 2 kilometres.
The Company’s work at Nendo has focused on strengthening its relationships with the local communities and establishing frameworks of engagement between the parties. To date, the Company has completed first phase reconnaissance prospecting at Nendo and has identified significant areas of bauxite mineralisation (ASX announcements 19 May, 7 July and 25 August 2016). The work undertaken has included drilling shallow hand auger holes on a wide spaced pattern, with negligible environmental impact.
Prospecting has been carried out with the assistance and employment of local landowners, which provided transparency of the Company’s activities and provided the opportunity to educate and inform the local communities of the resources existing on their land.
Exploration proposed for the June 2018 quarter was halted shortly after its commencement, following the unexpected receipt of a letter from the Solomon Islands’ Minister of Mines, Energy and Rural Electrification (Minister), advising that prospecting license PL 01/16 (Nendo Prospecting License) held by its 50% owned subsidiary Eight South Pty Ltd (Joint Venture or JV) in respect of the Solomon Islands Nendo Bauxite Project was cancelled (Minister’s Letter) (ASX announcement 6 June 2018).
Following receipt of the Minister’s Letter, the Board formed the view that it was appropriate that the Company’s securities be placed into a trading halt, and subsequently voluntary suspension, pending clarification of matters raised in that letter. In accordance with the requirements of the Minister’s Letter, exploration and project work at Nendo was immediately suspended.
The receipt of the Minister’s Letter was completely unexpected by the Company. Reasons provided in the Minister’s Letter for the cancellation of the Nendo Prospecting License included unsatisfactory level of prospecting at Nendo and failure to establish amicable relations with the local communities. The Company is of the view that these grounds are factually incorrect and therefore unjustified.
The JV has, and continues to, work closely with the Minister, the Mines and Minerals department and local communities and had initiated jointly determined strategies for on-going community consultation and prospecting at Nendo (and intends to continue to do so).
Minister’s decision to be appealed
In this situation, Solomon Islands law allows the JV to appeal against the Minister’s decision to cancel the Prospecting License. That appeal is an application to the High Court of Solomon Islands by way of a claim for judicial review, seeking an order that the Minister’s decision as communicated in the Minister’s Letter be quashed. The JV has engaged legal counsel with previous successful experience with similar appeal cases.
The appeal process is estimated to take between six (6) and 12 months. However, in parallel to the appeal process, the Company is investigating whether opportunities for an agreed settlement are available to the JV that may provide an earlier beneficial resolution to the situation.
The Company considers that the process undertaken by the Minister may not have followed all necessary requirements and, as noted, intends to pursue that matter via the appeal process described above.
Post June Quarter-end, the Company advised it had formally submitted its appeal documents with the High Court in the Solomon Islands with respect to the cancelation of the Nendo Prospecting License (ASX announcement 17 July 2018). Company and Joint Venture representatives will travel to Honiara in the coming weeks to continue out of court negotiations in parallel with the appeals process, with the aim of expediting the reinstatement of the Prospecting Licence. *update following next announcement
The Company will continue to aggressively pursue the matter for the benefit of all stakeholders and will update the market as required.
Pacific Bauxite’s previous exploration programs at Nendo confirmed the presence of extensive, high-quality bauxitic soils (ASX announcements 19 May, 7 July and 25 August 2016). The work undertaken included drilling shallow hand auger holes on a wide spaced pattern, with negligible environmental impact. Prospecting has been carried out with the assistance and employment of local landowners, which provided transparency of the Company’s activities and provided the opportunity to educate and inform the local communities of the resources existing on their land.