Australia shares dive on Kenya mine ownership law
29 October 2012, 09:55
Melbourne - Australian miner Base Resources' shares slumped 31 percent on Monday on worries that Kenya may take over part of its key project under a new law requiring the state to own at least a 35 percent stake in mining licenses.
The company said late on Friday it was trying to line up talks with the Kenyan government to understand whether the rule would apply to its $275 million Kwale mineral sands project, which would be the country's first large-scale mine.
It said the new regulation did not spell out whether it applied to existing mining leases, but it had legal advice the rule did not apply to the Kwale project, and if it did, it would be unconstitutional.
"Further, the Investment Agreement also provides that in the event of the Government taking action tantamount to expropriation or nationalization, Base is entitled to compensation for the full market value of all property thus taken," the company said.
The mine, due to start production in the second half of 2013, is expected to produce 330,000 tonnes of ilmenite a year, about 10 percent of the world's supply, 80,000 tonnes of rutile per year, which represents 14 percent of global output, and 40,000 tonnes of zircon.
Base's shares plunged A$0.125 to a near three-month low of A$0.285 in a firmer broader market.