PERTH (miningweekly.com) – ASX-listed Antilles Gold has reported a significant win in its long-running dispute with the Dominican Republic government.

The company on Thursday said that the company would not be held liable for taxation assessment on its completed Las Lagunas gold/silver project, and that the International Center for Settlement of Investment Disputes had been confirmed as the jurisdiction for arbitration of claims against the Dominican government.

Antilles in 2004 entered into a contract with the Dominican government to oxidize 5.4-million tonnes of sulphide gold tailings from the Pueblo Viejo mine that were stored in the Las Lagunas dam as the principle element of an environmental remediation programme to limit acid mine drainage from the dam. Antilles, through its subsidiary EnviroGold, was permitted to extract gold and silver from the tailings, with the expectation of a profitable operation.

The contract meant that EnviroGold would be exempted from any national or municipal tax, including income tax, but pay to the government 25% of the cash flow generated after recovery of its investment in the project, plus a 3% royalty on precious metals. A condition precedent to the special contract was the requirement for EnviroGold to gain approval from the Congress of the Dominican Republic for a waiver of taxation, which EnviroGold received within the stipulated time frame.

However, for the past seven years, the Dominican Taxation Department has lodged numerous income tax and asset tax assessments against EnviroGold, and has claimed penalties and interest. Antilles said on Thursday that this has required the company to defend each assessment in the Dominican Courts, as well as subsequent Appeals by the Taxation Department against Court decisions favourable to EnviroGold.

The Taxation Department ultimately challenged the legitimacy of the special contract in the Dominican Constitutional Court.

Antilles told shareholders that the Constitutional Court has now upheld a previous Supreme Court judgment in which the Supreme Court acknowledged the tax exempted status of EnviroGold under the special contract, and also that both the sharing of cash flow and royalties are not taxes but rather considerations to be paid to the Dominican State under the special contract. The Constitutional Court judgment should be issued within two to three weeks.

There is no provision for the government to apppeal decisions of the Constitutional Court.

Antilles said that it would now claim damages against the government to recover its legal costs, overheads, and other associated costs related to this matter, and these damages will be added to previous claims against the government for their breach of contract with respect to certain obligations under the special contract.

Claims against the government total approximately A$40-million including legal costs and interest.

The claims will be arbitrated by the International Center for the Settlement of Investment Disputes, and a decision is expected in June 2023.