Shares in Argosy opened 71.5c lower at 33c following a trading halt, but had rallied slightly to trade at 40.5c in the morning.
The impetus for the share price fall stemmed from news that Argosy’s wholly owned subsidiary, Andover Resources, will take the Burundi Government to the International Court of Arbitration in Paris to enforce its rights under the Mining Convention agreed by both parties in 1999.
“This decision has been taken after extensive but futile attempts by Andover to negotiate with the Government of Burundi to continue its work under the Mining Convention, and to obtain the necessary research permit from the Minister of Mines for that purpose,” Argosy said in a statement.
The country has been nothing but trouble for Argosy since 2000, where civil unrest – including the massacre of Tutsi refugees by Hutu militia in August 2004 – has caused the company to declare force majeure on several occasions on its Musongati nickel project.
According to Argosy, interruptions to Musongati entitles Andover to extensions and a further opportunity to proceed with exploration and feasibility work, and was confirmed in December 2005 by an Inter-Ministerial Commission, established to study the continued validity of the Mining Convention.
“In the face of the clear recommendations of the Inter-Ministerial Commission, the Minister of Mines first delayed taking any appropriate steps under the Mining Convention to enable Andover to resume work,” Argosy said.
“It has now been revealed that, without notice to Andover, the government recently proceeded with a second internal study that has issued recommendations diametrically opposite to those reached by the Inter-Ministerial Commission.”
Argosy added that at a meeting of the Council of Ministers held just last week, the Minister of Mines recommended the termination of the Mining Convention between the government and Andover, which was then accepted.
“Andover intends to prosecute its claims in arbitration vigorously,” Argosy said.
“It shall seek declaratory relief confirming its rights under the Mining Convention and pursue claims for damages as anticipated by the Government itself in the Inter-Ministerial Commission report.”
MiningNews.net was unable to reach chief executive Peter Lloyd for comment at the time of writing.
Argosy’s share price has experienced its fair share of volatility this year, jumping from a low of 6.4c in February to a high of $1.34 in April, following news that Argosy would meet with the Burundi Government to rejuvenate Musongati.
The Musongati nickel project, which has a non-JORC compliant laterite resource of 185 million tonnes grading 1.31% nickel, 0.08% cobalt and 0.2% copper, is also prospective for platinum, palladium, rhodium and gold.