Titan's Vista Gold Plant issues .... Just scrounging around for additional information, and came up with the following tidbits and some further questions.
For what it's worth, I'm just puttng it out there .... all just grist for the mill.
All publicly sourced information.
It would appear that the Titan Minerals circular of their offer to purchase all of the issued and outstanding shares of Core Gold may contains some materially inaccurate and outdated information.
There are a number of questionable statements throughout their circular, but let’s concentrate on one of the most recent issues to “crop up”
On Page A-52 of the circular, for only one example, Titan states the following:
“Following the completion of the Andina Acquisition, Titan has, among other things, accomplished the following:
- ……………………….
- Completed the permitting and licencing process to bring the Vista Plant into production in May 2019. The Vista Plant successfully completed all the requisite physical inspections for safety and environment aspects of the operations required by the DREM …. “ The following questions need to be asked :
1. If Titan has successfully completed the permitting and licencing process, what is this document from the Government of Peru website all about ?
https://www.regionica.gob.pe/pdf/transparencia_2019/resoluciones/grde/rgr_039_grde.pdf A translation using Google Translator provided here:
https://stockhouse.com/companies/bullboard?symbol=v.cgld&postid=30395706 2. Did Titan Minerals actually meet the 5 day deadline to respond in their defense? Anyone know ?
RESOLVED:
ARTICLE ONE, - START OF OFFICE THE ADMINISTRATIVE PROCEDURE TO REVIEW THE LEGALITY OF THE DIRECTIONAL RESOLUTION NO. 044-2018 / GORE-ICA / DREM DATE DECEMBER 31, 2018 OF THE DIRECTORAL RESOLUTION NO. 022-2018 / GORE-ICA / DREM OF DATE MAY 21, 2019, for being presumably immersed in grounds of annulment provided in numeral 1) of article 10 of TUO of law No. 27444
SECOND ARTICLE, - GRANT the administrator a period of one (05) working days as stipulated in the Third Paragraph of Article 211 of TUO of Law No. 27444; which will begin as of the following business day of the one in which it is notified, to express the arguments or provide the evidence that distorts the grounds that question the legality of the DIRECTORAL RESOLUTION NO. 044-2018 / GORE-ICA / DREM DATE DECEMBER 31, 2018 AND THE DIRECTORAL RESOLUTION NO. 022-2018 / GORE-ICA / DREM DATE MAY 21, 2019.
THIRD ARTICLE, - NOTIFY the Resolution of START OF ADMINISTRATIVE PROCEDURE OF OFFICIAL NULLITY OF THE DIRECTORAL RESOLUTION NO. 044-2018 / GORE-ICA / DREM OF DATE DECEMBER 31, 2018 AND OF THE DIRECTORAL RESOLUTION NO. 022-2018 / GORE-ICA / DREM DATE MAY 21, 2019, TO THE VISTA GOLD SAC COMPANY duly represented by Mr. ALBERTINI BAFFIGO GIORGIO RAMON, domiciled at Jr. Bernardo Monteagudo No. 310 Magdalena del Mar - Lima, in accordance with the provisions of Articles 18 and 24 of Law No. 27444 Supreme Decree No. 006-2017-JUS, for the pertinent purposes 3. Did Titan Minerals report this potential material deficiency to their shareholders ? I haven’t seen any public announcement regarding this legal action that Titan needed to address in Peru. Could someone show me where I could find Titan’s clarification ?
4. Has Titan Minerals discussed this issue with any member of Core Gold’s board of directors ?
5. As the Vista Mill is Titan Minerals main asset, if the permitting process was deficient and Titan has not acted in accordance with the laws of Peru, what is the current status of the Vista Mill ?
6. If the validity of the permitting process for the Vista Mill is in question, what valuation should Core Gold shareholders place on the shares of Titan Minerals ? Afterall, the currency of Titan’s offer is shares of Titan. How does one value those shares if a key asset’s status is possibly in jeopardy of having its permits nullified ?
7. Has Titan Minerals been questioned by the Australian Stock Exchange about the status of the Vista Mill permitting process ? A number of submissions were made to the Australian Stock Exchange regarding this concern once this above cited document came to light in the last week of November. More filings are being registered with the ASX compliance people this week.
8. Again, If there are issues with the legality of the permitting process of the Vista Mill in Peru, and this is Titan’s primary asset, what is the value of Titan’s shares ? One would have to think that this is a materially adverse event that needs to be reported prior to Titan shares commencing trading of the ASX again. Shouldn't Titan’s circular for their takeover offer of Core Gold be amended to take into account the unknown legal status of the Vista Mill ?
9. How could any Core Gold shareholder, (INCLUDING ANY DIRECTOR, their family, friends or business associates) being offered Titan shares, consider pledging their shares without making a fully informed decision unless some claification about this issue is provided by Titan ?
Titan claims they have 2 legal opinions that Titan is not responsible for the environmental damages involving the improper disposal of cyanide laced tailings, both onsite at the Tulin Plant, and buried in the surrounding areas, some apparently damaging the World Heritage Site Nasca Lines, and the alleged manufacture of construction blocks using cement and tailings from the Tulin operations that were subsequently used in some buildings and rumour has it, were sold to the local residents in the area for construction of some homes.
Anyone care to give a value of those two legal opinions ?
Now, if Titan can offer two legal opinions on their Tulin problems …. I think it is only fair to cite another legal opinion, from the public court documents filed for the June 2019 Fairness Hearing of the Plan of Arrangement held before the B.C. Supreme Court, regarding the problems, known at the time, that Titan had involving the permitting process for the Vista Mill .
The following is an almost complete excerpt from the public record, in an affidavit filed for the plan of arrangement fairness hearing. The opinion is from a senior partner of a legal firm based in Lima, Peru. I have removed the names of the people on the affidavit, the subject matter / legal opinion is the important part. Pardon any typos from transposing .....
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This is the 1st affidavit
of ****** ******** in this case and was made on June 13, 2019
No. S-195415
Vancouver Registry
IN THE SUPREME COURT OF BRITISH COLUMBIA
IN THE MATTER OF SECTION 288 OF THE BRITISH COLUMBIA
BUSINESS CORPORATIONS ACT, S.B.C. 2002, C.57, AS AMENDED
AND
IN THE MATTER OF A PROPOSED ARRANGEMENT
INVOLVING CORE GOLD INC.
CORE GOLD INC.
AFFIDAVIT
** ****** * *******
******* ***
Vancouver, B.C.
Dear ** *******
You have asked us to render an opinion in connection the construction permit obtained by Vista Gold S.A.C. ("Vista Gold") to build the beneficiation plant named "JULIA ESTHER" (the "Plant"), and the subsequent beneficiation concession.
In giving this opinion we have assumed, without investigation or independent inquiry the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as conformed, certified, photostatic or scanned copies thereof, the authenticity of the originals of such documents and the genuineness of all signatures thereon.
We are qualified to give this opinion under the laws of Peru and, in rendering this opinion, we have reviewed the following documents:
- The TECHNICAL REPORT N° 009-2018-GORE-ICA/DREM-AT/DFLO addressed by
Mr. David Fernando Lopez Oliva, Inspector of the Regional Directorate of Energy and Mines of the Regional Government of Ica ("DREM-ICA") to the Director of the DREM- ICA, dated as of May 16", 2018 (the "Technical Report");
- The TECHNICAL LEGAL REPORT N° 041-2018-GORE-ICA/DREM/AT-ALAVGHM-DRAGM addressed by Mr. David Ricardo Alba Gomez, a lawyer of the Legal Department of the DREM-ICA and, Mr. Walter Gustavo Huerta Morales, an engineer of the Technical Department of the DREM-ICA to the Director of the DREM-ICA, dated as of December 28, 2018 (the "Report");
c) The edition of the Official Gazette "El Peruano" corresponding to December 28", 2018;
d) The REGIONAL DIRECTORAL RESOLUTION N° 044-2018/GORE-ICA/DREM/H issued by Mr. Elmer Moises Ruiz Guio, Director of the DREM-ICA, dated as of December Los Angeles 325 31", 2018 (the "Resolution");
e) The RESOLUTION OF THE REGIONAL GENERAL MANAGER N° 0037-2019-- CA/GGR, issued by Mr. Carlos G. Avalos Castillo, Regional Generel Manager of the Regional Government of Ica, dated as of January 3, 2019.
Having considered these documents and having regard to the relevant laws of Peru we are pleased to advise that in our opinion:
I. FACTS: 1.1 On December 6, 2018, Vista Gold, duly represented by Mr. Giorgio Ramon Albertini Baffigo, filed an application (through the extranet of the Ministry of Energy and Mines, Registry N° 338), requesting that a beneficiation concession for the Plant be granted.
1.2 On December 28th, 2018, the Report was issued by the Technical Area of the DREM-ICA, acknowledging that the application file has been reviewed and evaluating the fulfillment of the legal requisites. In particular, those requisites contained in the Mining Procedure Regulation, approved by Supreme Decree N° 018-92-EM, as amended (the "Regulation"). The Report indicates the following:
a) That Vista Gold has Small Mining Producer status (paragraph 4.1), an assertion that is also made in paragraph 12.3, with a 350 tons/day declared production;
b) It approves the Technical File of the Plant (paragraph 12.1); and,
c) It concludes that the publication of the notifications by Vista Gold must be authorized, prior approval by the Directorate of the DREM-ICA, in accordance with article 35° of the Regulation (paragraph 12.2).
1.3 The notifications referred to in the Report were published by Vista Gold on December 28, 2018.
1.4 On December 31, 2018, the Director of the DREM-ICA issued the Resolution, which makes reference to the application filed by Vista Gold and the Report. Among other things, the Resolution states the following:
a) It makes reference (in the seventh paragraph of the whereas section), to the publications made on December 27, 2018 in the newspaper "Como" from Ica and the Official Gazette "El Peruano"; and,
b) Further resolves to authorize the construction of the Plant, with a 350 tons/day capacity, in the Area of Pampa Chauchilla, district of Vista Alegre, province of Nasca, department of Ica.
II. LEGAL PROCEDURE:
The procedure that must be followed in order to obtain the authorization for the construction of a beneficiation plant and, thereafter, a beneficiation concession, is detailed in articles 35° to 38° of the Regulation. The following is a summary of said procedure:
2.1 The applicant to a beneficiation concession must file a request, enclosing all the requisites and documents detailed in the Regulation. (article 35.1)
2.2 Once the Regional Government (through the Regional Directorate of Energy and Mines) (the "DREM") has verified the fulfillment of all the requisites, a resolution must be issued delivering the notifications to the applicant for their publication. (article 35.2)
2.3 The applicant must pick up the notifications and publish them within the following 10 business days in the Official Gazette of Peni, "El Peruano", and the newspaper in charge of the publication of the judicial notifications corresponding to the capital of the department where the project is located. (article 36.1) The publications must include a summary of the information related to the project, as required by the Regulation. (article 36.2)
2.4 Within 15 business days after the publication has been made, the applicant must file with the DREM the pages of the newspapers where the notifications have been published. If the pages are not filed within this term, the application will be deemed to have been abandoned. (article 36.3)
2.5 Once the publications have been filed and after the application has been evaluated, should there be no opposition to the proposed project, the DREM will issue a resolution authorizing the construction of the beneficiation plant and other components. (article 37.1) Oppositions can be filed within a maximum term of 15 business days, counted from the date of the last publication. (article 37.2)
2.6 Once the construction of the plant has been completed, the applicant must request an inspection by the DREM, so that it can verify that the construction of the beneficiation plant has been made in accordance with the approved project or that it serves its purpose, regarding to mining safety and hygiene and environmental impact. (article 38.1)
2.7 The inspectors of the DREM and the applicant will sign the minutes of the inspection. (article 38.4) Should it be favorable, the DREM will grant the title of the beneficiation concession and the operational authorization of the beneficiation plant, within 15 business days after the inspection took place. (article 38.7)
III. IRREGULARITIES FOUND IN THE PROCEDURE FOLLOWED BY VISTA GOLD:
The following is a list of several material irregularities found in the procedure followed by Vista Gold to obtain the authorization that allowed them to build the Plant:
3.1 The Report mentions twice that Vista Gold has a Small Mining Producer status. However, this is not the case as Vista Gold is not included in the lists of the Ministry of Energy and Mines nor is it listed in the Integral Registry of Mining Formalization - REINFO. This matter was observed by an Inspector of the DREM-ICA and reported in the Technical Report dated May 16", 2018.
3.2 The Technical Report also states that the Directorial Resolution N° 032-2010-GORE- ICA/DREM/AAM, through which the Semi-detailed Environmental Impact Study was approved for the Plant (the "EIASd") was no longer in effect, since Vista Gold had not initiated the implementation of the project within the term stipulated in article 57° of Law N° 27446, Law of the National System for the Evaluation of the Environmental Impact. Even though the Report makes reference to two amendments to the EIASd, we have not seen any evidence that said amendments where made within the terms required by law. According to the Technical Report, the construction of the Plant "... would have been made in violation of the Authorizations, licenses and/or other permits issued by the relevant Authorities." This information is pending to be confirmed.
3.3 The Report stating that the publication of the notifications should be approved, with the prior favorable opinion of the General Directorate of Mining, is dated December 28', 2018. This necessarily implies that the publication of the notifications should have been made on a later date. Nevertheless, the publication was made in the Official Gazette "El Peruano" on that same date, i.e.: December 28", 2018. This is problematic on two accounts:
a) The Report itself does not authorize the publication. It merely indicates that it should be approved, subject to a prior favorable opinion of the General of Mining. There is no evidence of a Resolution with a favorable opinion of the DREM-ICA, nor of the authorization of the publications by the DREM-ICA. 'Therefore, a step provided for in the same Report was omitted; and,
b) The publication was made on the Official Gazette "El Peruano" on the same date the Report was issued, which is simply impossible from an administrative point of view. Assuming:
(i) that the Report sufficed to consider that Vista Gold was authorized to publish the notification (which it was not); and,
(ii) that the representative of Vista Gold would have picked up the notifications from the DREM-ICA on the very same date that the Report was issued (December 28, 2018), it was materially impossible that the notifications could be published on that same date. When the Official Gazette "El Peruano" receives a publication request, it is included — at best — in the edition of the following day. Everything indicates that the representative of Vista Gold received the notifications from the DREM on a date prior to that when the Report was issued. Otherwise, there is no explanation as to how the notification was published in the Official Gazette "El Peruano" on the same date, i.e. December 28', 2018.
3.4 The Resolution makes reference to the notifications being published on December 27", 2018, which is one day before the date when the Report was issued. Moreover, the notification published in the Official Gazette "El Peruano" is dated December 28, 2018. Thus, the date included in the Report is incorrect.
3.5 The Report shows a stamp acknowledging receipt by the Secretary of the DREM-ICA dated December 31, 2018. Nevertheless, it shows no Registry number, no hour of reception, and no signature of the person who received it. These omissions are highly unusual in the public administration. It must be noted that the Resolution was issued by the DREM-ICA on December 31, 2018, i.e., on the same date the Report was received.
3.6 The Resolution was issued on December 31, 2018, in clear violation of the procedure stated for in the Regulation. As explained above, after the publications have been made, the DREM-ICA should have waited 15 business days to allow for any person considered to have a legitimate interest to file an opposition to the project. In spite of the irregularities found in the publication of the notifications, even if the publications would have been made correctly, the DREM must have waited the indicated term before issuing the resolution that authorized the construction of the Plant, to allow oppositions and, should it be the case, to process them accordingly.
Since the Resolution was issued in breach the formalities required by the Regulation, it is our opinion that this administrative act is subject to nullity according to article 100 of the Law of General Administrative Procedure, whose Uniform Text was approved by Supreme Decree N° 004-2019-JUS ("LPAG") and, therefore, the construction of the Plant would have been carried out illegally. Moreover, the beneficiation concession could only be granted after the DREM-ICA inspected the construction and determined that it had been made in accordance with the Resolution. For this reason, the resolution granting the beneficiation concession is linked to the Resolution, since both are part of the same procedure. In accordance with article 13° of the LPAG, the nullity of the Resolution would also lead to the nullity of the Regional Directorial Resolution N° 022-2019/GORE-ICA/DREM, which granted the beneficiation concession of the Plant to Vista Gold.
3.7 Finally, it should be noted that after the elections that took place in 2018, the elected Regional Governors were due to take office on January 2nd, 2019. It is common practice in Peru that the new Regional Governors replace the officials in relevant positions with their own designated officials. Among the officials that were replaced was the Director of the DREM. In fact, through a Resolution of the Regional General Manager N° 0037-2019—CA/GGR, dated January 3, 2019, Mr. Elmer Moises Ruiz Guio (who signed the Resolution on December 31, 2018) was removed, and Mr. Luis Antonio Arteaga Coronado was appointed as new Director of the DREM-ICA. We do not purport to be experts on and do not purport to be generally familiar with or qualified to express legal opinion based on any law other than the laws of Peru and accordingly express no legal opinion herein based upon any law other than the laws of Peru.
Yours truly,
***** *******
Senior Partner
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DO NOT TENDER TO THE TITAN MINERALS OFFER
GLTA !