Tanzania Joins Other Commodity Usurpers

The Tanzanian government is making a classic folly of a move. When you start seizing the assets of international companies guess what follows? Unemployment, capital outflows, no new investment funds, and other very unpleasant things. Just ask Evo Morales of Bolivia.

Congrats Tanzania. You have joined hands with other tyrannical, banana republics who have no real investment or governing sophistication. Jim Sinclair, whom I respect, may have made a grave error in trusting these people after the investors money has already been spent developing these mines.

I own this stock so this blog post does me no favors.

Tanzanian Royalty's Subsidiary Tanzam Provides Notice of Force Majeure

"This notice of Force Majeure is based upon the invasion and forced occupation by several hundred illegal miners of our mining properties including the South Pit and other areas within the Buckreef site, thereby endangering our team and preventing Tanzam from continuing its mining operations. This continuing intrusion into our mines now at night is well known to the government authorities, as are the active illegal mining operations taking place right on our border...."

"The Deputy Minister requested a meeting onsite in early January. During the meeting cell phones and note books were forbidden by the Deputy Minister's staff, but the Deputy Minister's speech was videotaped. We have the master of this videotape. This same Deputy Minister made many other requests to be accomplished within 14 days that were not contractual obligations or required by mining law. The Company was threatened with extreme sanctions without due process of law if the demands were not met."

"We have invested USD$71,000,000 in Tanzania and been a 99% Tanzanian company since our entry. We expect to bring these matters to a successful resolution, as these developments have been initiated by the new government apparently not familiar with the international contracts that exist between companies and their country."

 

So, said another way, the Tanzanians elected a government who have no idea what they are doing and are quite willing to strong arm and steal from international investors. That never ends well for a country who harms themselves in the international capital markets.