RE: Bacanora v Mexico Govt - ICSID28 Aug 2025 16:40
Updates on Sonora Project in Mexico
In May 2024, Ganfeng International Trading (Shanghai) Co., Ltd., Bacanora Lithium Limited and Sonora Lithium Ltd. (“Claimants”), the controlled subsidiaries of the Company, initiated an arbitration proceeding against Mexico before the International Centre for Settlement of Investment Disputes (“ICSID”) to challenge various measures that violated their rights under investment treaties. These measures included a series of laws, regulations, and related measures issued by Mexico, which effectively nationalized lithium resources, impacted the operation of the Sonora Lithium Project (“Project”) and culminated with the cancellation of the mineral concessions held by the Company’s Mexican subsidiaries on pretextual grounds.
During the Reporting Period, the Secretary General of ICSID has registered the arbitration, and the tribunal was formally constituted in January 2025. In April 2025, the Claimants submitted their memorial on the merits, witness statements and expert reports to the ICSID tribunal. In the ICSID arbitration, Claimants are asking that the tribunal order Mexico to fully repair the effects of its treaty violations in the form of: (i) the restitution of the concessions and associated rights to develop the Project in Mexico, as well as compensation for the Project’s delays; or (ii) compensation for the entire fair market value of the Project. In July 2025, the Company’s subsidiaries in Mexico withdrew the constitutional and administrative-contentious lawsuits filed n Mexico.. The withdrawal of these proceedings in Mexico coincides with Claimants’ pursuit of the restitution remedy in the ongoing ICSID arbitration and will not cause a significant adverse impact to the Company and its subsidiaries. The final decision of arbitration has not yet been issued. There is uncertainty in the amount of compensation. The final compensation amount shall be subject to the decision of arbitration. The Board will actively pay attention to the progress of the matter and fulfil its information disclosure obligations in a timely manner.
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