Almadex Secures Progress in Investment Arbitration Against Mexico
Almadex Minerals Ltd., widely known as Almadex, has taken a significant step forward in its investment dispute against Mexico by submitting a memorial related to its international arbitration proceedings. The case concerns the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), addressing grievances raised by Almadex and its partner Almaden Minerals Ltd.
Details of the Arbitration Proceedings
This joint claim is prompted by actions taken by the Mexican government that resulted in the complete loss of investment for the companies involved. Prior to the unfortunate turn of events, Almaden Minerals had maintained complete ownership of the Ixtaca precious metals project, with Almadex holding a 2.0% Net Smelter Return (NSR) royalty on it.
The companies have structured their approach through a Litigation Management Agreement (LMA) designed to enhance their management of the arbitration process. Almaden has assumed the initial financial burden, enabling Almadex to focus on operational matters while still playing an active role in the proceedings. With a litigation financing arrangement described as non-recourse, Almaden has secured funding of up to US$9.5 million.
Claims of Breach and Compensation
In the memorial, Almadex elaborates on several breaches by Mexico, including the unlawful expropriation of protected investments without compensation and violations of the fair and equitable treatment obligations under the CPTPP. The claimants have put forth a demand for damages totaling US$1.06 billion, with adjustments planned to reflect future fluctuations in precious metal prices and other related factors.
The Context of the Situation
The backdrop of the claim dates back to events beginning in 2015 when an ejido community declared itself Indigenous and subsequently filed a lawsuit against various branches of the Mexican government. This legal challenge creatively argued the constitutionality of Mexico’s mineral title acquisition processes, which allegedly neglected the necessary Indigenous consultations.
Although Almaden attempted to accommodate the community's concerns by relinquishing about 7,000 hectares of its landholding, legal complications persisted and culminated in a ruling from Mexico’s Supreme Court in 2022. The court asserted that the mining authority had improperly issued mineral titles without adhering to Indigenous consultation requirements.
The Impact of Legal and Governmental Changes
Following the political shift in leadership with the arrival of President Lopez-Obrador, the administration has adopted a more skeptical stance towards foreign mining operations. This has intensified challenges for companies like Almadex and Almaden, making their investment protection strategy crucial in light of evolving legal landscapes.
Moving Forward
Despite the setbacks, the claimants remain resolute in their pursuit of justice as they filed their Request for Arbitration in June of the preceding year. With the formation of a three-member arbitration panel and expectations for updates on the arbitration calendar, Almadex is poised to navigate these proceedings diligently.
Almadex's Commitment to Mining Exploration
Almadex Minerals is dedicated to exploration, managing an impressive portfolio of mining projects and royalties across North America. The company leverages its experience in geology and drilling to explore new opportunities effectively, turning potential into thriving success.
On behalf of the Board of Directors,
“J. Duane Poliquin”
J. Duane Poliquin, Chairman
Almadex Minerals Ltd.
Frequently Asked Questions
What is the main issue Almadex is facing?
Almadex is pursuing a claim against the Mexican government over the unlawful expropriation and treatment of its investments related to the Ixtaca project.
How much compensation does Almadex seek?
The company seeks damages totaling US$1.06 billion, subject to adjustments as the claim proceeds.
Who is assisting Almadex in the arbitration process?
Almadex is cooperating with Almaden Minerals and has retained experienced legal counsel for the proceedings.
What is the LMA, and how does it help Almadex?
The Litigation Management Agreement streamlines the arbitration process, allowing for more efficient management and allocation of costs between Almadex and its partners.
What role does the Supreme Court of Mexico play in this case?
The Supreme Court ruled previously on the legality of mining titles, impacting Almadex's rights and the ongoing arbitration process.
