An Australian-based exploration company has secured USD 4.4 million to fund an ICSID arbitration against the West African country.
Australian-headquartered gold developer Sarama Resources is set to launch arbitration proceedings against the government of Burkina Faso over the withdrawal of a crucial exploration permit.
The company is seeking “substantial damages” over the withdrawal of the Tankoro 2 Exploration Permit last year. The permit is central to the company’s 100%-owned Sanutura Project in the southern Houndé Belt of Burkina Faso, site of the country’s pre-eminent gold reserves. Sarama held exploration permits for the deposits comprising the Sanutura Project, including the multimillion-ounce Tankoro deposit.
Sarama claims the “illegal” retraction of the permit has rendered the project valueless and has destroyed the company’s investment in the project in its entirety.
The permit dispute follows the coup d’état in Burkina Faso in September 2022, which saw military leader Ibrahim Traoré rising to power and Simon-Pierre Boussim becoming the country’s new minister of energy, mines and quarries.
After more than 10 years of exploration and development activities, Sarama claims it was poised to issue its preliminary economic assessment to advance the Sanutura Project toward development, when Boussim – in September 2023 – notified the company that its application for the permit had been purportedly rejected. The cancellation came nearly two years after the previous minister, Dr Bachir Ouédraogo, approved the permit. Confirming the cancellation, Boussim publicly stated last year that the permit was available for purchase.
In a statement, Sarama said it will proceed with filing a request for arbitration and intends to “prosecute its case to the fullest extent possible”. The filing will be logged with the International Centre for Settlement of Investment Disputes (ICSID) under the Canada-Burkina Faso Bilateral Investment Treaty (BIT).
Sarama has secured third-party funding from Locke Capital in preparation for the proceedings. The USD 4.4 million four-year non-recourse loan facility will cover all fees and expenses stemming from the arbitration process.
Kristen Young, partner at Boies Schiller Flexner (BSF), which is acting for Sarama, tells CDR/ALB in an email that the case is reflective of the “unfortunate resurgence of resource nationalism” that has accompanied the wave of coups d’état across West Africa in recent years, including in Burkina Faso. “With litigation funding now in place, we look forward to vindicating Sarama’s rights in full under the Treaty. This case demonstrates the geographical breadth of our arbitration practice at BSF and focus on Francophone Africa over the last two years,” Young adds.
Andrew Dinning, founder, president and chief executive of Sarama, said in a statement: “The establishment of a non-recourse funding facility to cover all expenses related to the company’s arbitration case represents a major step forward in its pursuit of redress for the substantial damages suffered as a result of the government of Burkina Faso’s illegal actions.”
The company first warned Burkina Faso of its intent to launch arbitration proceedings back in November 2023. According to the exploration company, the government of Burkina Faso failed to respond substantively to its efforts to resolve the dispute amicably at that time.
In other arbitration developments, two Mauritius-headquartered developers filed a USD 500 million investment arbitration claim against Tanzania earlier this month for allegedly withholding licences and attempting to expropriate a power plant.