Cadence acts over Mexico cancelled licences

Cadence Minerals plc subsidiaries in the Sonora lithium project have filed administrative review recourses against the Mexican government’s resolutions cancelling the concessions.

JOINT VENTURE

The company’s £3.89 million interest is through a 30% stake in the JV interests in Mexilit S.A. de CV and Minera Megalit S.A. de CV.

Gangfeng Lithium Group is developing Sonora, comprising an open pit and lithium chemical product processing facility with the main planned lithium product of lithium hydroxide. 

CANCELLATIONS

The filing of recourses follows Mexico’s allegations that the subsidiaries failed to submit sufficient evidence within a specified time frame to prove minimum investment obligations to develop the concessions in 2017-2021. 

The government’s stance stems from the 2022 and 2023 amendments to its Mining Law banning lithium concessions and granting exclusive lithium mining rights to a state-owned entity.

All nine of the subsidiaries’ concessions came under review, although Cadence and Ganfeng maintain that the Sonora concessions, granted prior to the new laws, are unaffected by the changes.

Cadence today said that as of May 2023, Mexilit and Megalit had submitted “extensive evidence of their compliance” and “in a timely manner”.

However in August, Mexico’s General Directorate of Mines (DGM) issued a formal decision notice indicating cancellation of all nine concessions in the project.

Cadence added that the cancellations, subject to ongoing appeals, were not final.

“Moreover, Ganfeng and Cadence’s position is that the resolutions cancelling the concessions violate both Mexican law and international law as they are arbitrary, unsubstantiated in both fact and law and infringe upon the company’s, Ganfeng’s and its subsidiaries’ fundamental due process rights.

“Therefore, Ganfeng and the Mexican subsidiaries have filed administrative review recourses before the Secretary of Economy against the aforementioned resolutions.

“There is still uncertainty about the impact on Cadence’s investment.

“Ganfeng is pursuing various remedies, including administrative review recourses to challenge the DGM’s resolutions. If necessary, Ganfeng will resort to additional remedies under Mexican or international law.” 

VALUE

Cadence chief executive officer Kiran Morzaria added that despite apparent further delays, value would only grow at Sonora once mining began in Mexilit’s concessions, which was nine years into the mine life.

“In the board’s opinion, substantially more value is to be had from our 30% stake in the Amapa iron ore project [in Brazil] once it is brought back into production.”