Indiana Resources (ASX: IDA) (FRA: GDM) (OTCPK: GSMGF) is up 76% on the news that it has won the arbitration proceedings against the government of Tanzania.As far as it's possible to tell from reports this is something they should have won too - it was an obviously silly thing that the government had done. But then this was something common in Tanzania under the previous President, John Magufuli. The arbitrary exercise of executive power over mineral deposits was something he was prone to and that also something that international treaties say you cannot do.
The specific news here for Indiana: “The arbitration Tribunal unanimously ordered Tanzania to pay the Claimants US$76,706,461 in damages and additional losses, as well as compound interest at the rate of 2% above the USD Prime rate on the amount awarded from 10 January 2018 to the date of payment. This amounts to a total of more than US$109.5 million in damages and accrued interest at the date of the Tribunal's Award (and interest continues to accrue until payment).”
Effectively, they get all of the costs to date back. What they don't get, of course, is an operating nickel mine which they might have had by this point. But that's also not how these international treaties work. You get what you would have had if government hadn't stolen it from you. But as this was a prospective mine the award is not the same as owning an actual and producing nickel mine. Obviously not.
Indiana Resources share price from ASX
Well, all of that's lovely but this does then leave the question of what do we do? Indiana will, once the award is paid, have substantial cash. But it will be cash - not a mine. So it's a once off issue. They might then return capital to shareholders, might use it for further exploration. We'll have to wait and see on that.
In this near immediate further - like, this morning - there is something else we can do. That Frankfurt quote (GDM) doesn't seem to have moved much yet at our pixel time. And the OTCPK one (GSMGF) also hasn't. We're not sure how much liquidity is there either - not much on the OTC at least. But it might be possible to nibble away at a few purchases and get in before the local price moves to match the global news. Such arbitrages do occur and it's in these low volume small caps that they do.
As a longer trade on Indiana Resources we simply have no view - on payment of the award they're going to be a cash shell really. But if the American brokers haven't woken up as yet there might be a reasonable profit to be had in small volume.