Zambian High Court gives its government 30 days to decide Argonaut Resources’ appeal

Africa is renowned for being a difficult jurisdiction to operate in. Now, an ASX-listed microcap has found itself in the middle of what could become a major game-changer for Zambian minerals law. 

Argonaut Resources (ASX: ARE), currently embroiled in a legal proceeding against the Zambian government, has now received guidance as to when and if the licence cancellation will be upheld or overturned.  

On Tuesday, the company confirmed the Zambian High Court has ordered the Zambian Minister for Mines Paul Chanda Kabuswe to decide on Argonaut’s appeal within 30 days. 

“The order made this week is a testimony to the independence of the Zambian courts and to the government’s commitment to the separation of powers,” Argonaut CEO Lindsay Owler said.

Kabuswe was appointed Minister for Mines in September of 2021. 

Under his watch—according to Argonaut—the company’s Lumwana West licence was improperly cancelled and then “illegally re-granted to a newly registered company.”

Sympathies from the justice

The Zambian High Court has previously suspended both the cancellation of the Lumwana West licence and the re-granting of the licence to another company. 

“This order speaks to…central tenents of President Hakainde Hichilema’s government, specifically: the rule of law…and Zambian prosperity via increased copper production,” Owler said.

The tenement underpinning Lumana West straddles the well-understood Central African Copperbelt. Argonaut’s 90% owned subsidiary Mwombezhi Resources Limited is the entity proceeding the court action. 

Test case tension 

Now, Argonaut finds itself the subject of a “test case” with an international profile. 

For the uninitiated, in legal contexts, test cases refer to first-of-its-kind lawsuits which are likely to set precedent in relevant jurisdictions for counterpart entities in the future. 

A local example is BPH Energy’s case against the Commonwealth with regards to Scott Morrison’s self-appointment to the resources portfolio, though, both the government and BPH are now seeking to avoid a trial. 

Should Zambian Minister Kabuswe ignore the court’s order, Argonaut clarified it will proceed with a criminal prosecution. 

“The court was compelled to intervene to ensure that the Minister meets his obligations under the Zambian Mines and Minerals Act,” the company wrote on Tuesday.

What is the thrust of Argonaut’s case? 

On Tuesday, the company outlined a number of particulars regarding its case against Kabuswe. 

Those include but are not limited to: 

• Economic loss from the surprise cancellation after 10 years of investment 

• Argonaut was served notices outside the timeframes legislated by the Zambian Mines and Minerals Act

• Correspondence from Mwombezhi to the Ministry went unanswered 

• “Breaches alleged in the [suspension] notice were generic in nature and not applicable” 

• The Ministry allegedly did not consider Argonaut’s demonstration of adherence to regulation 

• A third party was given a licence for Lumwana West while Argonaut still technically held the licence itself (based on Argonaut counsel’s interpretation of Zambian law that rendered the cancellation invalid) 

• There was no financial documentation explaining the third party’s acumen to take on the Lumana West licence 

Argonaut's three month charts show the impact of significant illiquidity