The London Court of International Arbitration (LCIA) has recently rendered a final award in favour of Canadian uranium miner Denison Mines (TSX: DML) for the previously disclosed arbitration proceedings between the company and Uranium Industry (UI).
In November 2015, Denison completed the sale of its mining assets and operations located in Mongolia to UI pursuant to an amended and restated share purchase. The primary assets at that time were the exploration licenses for the Hairhan, Haraat, Gurvan Saihan and Ulzit projects.
In September 2016, the Mineral Resources Authority of Mongolia formally issued mining license certificates for all four projects, triggering Denison’s right to receive additional post-closing contingent consideration of $10 million, with an original due date of November 16, 2016.
The payment due date was later extended to July 16, 2017, under an extension agreement between the two parties. As consideration for the extension, UI agreed to pay interest at a rate of 5% per year, payable monthly up to the due date, and also agreed to pay a $100,000 instalment towards the balance of the receivable amount. However, the required payments were not made, Denison says.
Subsequently, the company served notice to UI in February 2017 and later that year filed a request for arbitration with the LCIA in conjunction with the default of UI’s obligations.
In its final ruling, the arbitration panel declared that UI had violated its obligations to Denison under the related agreements and ordered UI to pay Denison $$10 million plus interest at a rate of 5% per annum from November 16, 2016, plus certain legal and arbitration costs. The arbitration panel further dismissed all other claims and counterclaims.
Denison is currently focused on uranium mining in the Athabasca Basin region of northern Saskatchewan.