Deep-South Launches Formal Legal Challenge in Namibian High Court to Restore License for Haib Project

A rule of thumb for the junior mining sector is to expect the unexpected. It is typical for a junior to encounter challenges along the path to advance a project. Deep-South Resources Inc. (CA:DSM – $0.05, US:DSMTF – $0.03, GER:DSD – €0.02) has been able to deliver exceptional results in the early phases of its plan to establish the Haib copper deposit as a viable candidate to restore mining operations.

The setback reported last month to deny the license EPL 3140 renewal certainly came as a surprise. Even so, Deep-South correctly handled the situation by promptly reporting the news and then requesting an urgent meeting with officials from the Namibian Ministry of Mining. However, the decision was unfavorable and the license renewal was not secured. Deep-South reluctantly opted to halt the various work in process.

This week, the Company has issued another update indicating that the fight to restore its mining license continues. Deep-South has announced that it has instructed its Namibian legal representatives to file a formal application with the High Court of Namibia to review the decision of the Ministry of Mines and Energy that previously denied the license renewal. The Company also seeks a court decision to restrict the issuance of a license for the Haib project to any other applicant in the interim. Deep-South is working with a highly respected law firm and may also consider international legal options to pursue its interests.

Circumstances Outlined by Deep-South Suggest the Presentation of a Strong Case

Deep-South has thrown down the gauntlet, demonstrating its intention to pursue all legal remedies to restore the Haib project status to a fully licensed and permitted mine development candidate. One of the positive aspects to this project that initially attracted the Company to acquire the property is that Namibia is considered a jurisdiction that is favorable for stable property rights and is supportive of mining activity. Protections exist to resolve disputes within a clearly defined framework of laws. This application to involve the High Court is a powerful option to gain redress for what appears to be an error of policy in the decision rendered by the Ministry of Mining and Energy.

Of note, in addition to the Minister of Mining and Energy, Orange River Exploration and Mining C.C. (Orange River) is formally named in the application. Deep-South contends that Orange River had applied for an Exclusive Prospecting License for the area including the Haib deposit on November 12, 2020. This appears to be a conflict as Deep-South had already been granted the Prospecting License for the project at that time, in addition to receiving permitting for the exploration program.

Perhaps the most obvious injustice regarding this situation is that one of the grounds presented to justify the denial of the license renewal was that a Pre-Feasibility Study had not been launched. The Company counters that an upgraded Preliminary Economic Assessment had commenced instead along with a full Feasibility Study. This too had been effectively communicated to the Ministry of Mines and Energy prior to its decision. No previous objection had been expressed to any of the progress updates reported by Deep-South during the process.

Conclusion

Deep-South has proceeded correctly to advance its operations in compliance with the terms of the Haib license EPL 3140. When this critical renewal was denied, the Company also acted promptly to formally present its case in objection to the decision. Deep-South has now launched a formal court process to protect its interest in the project. The Company remains steadfast that it has entirely performed according to the conditions required under the license terms and therefore it expects a reversal of the setback that was announced in June.

Deep-South has invested a significant amount of money and achieved notable results along the way to advance the project. It should also be highlighted that in addition to a formal legal process to address this situation, the Company also has high-level contacts in Namibia that are also advocating to see the Haib project restored to good standing under control of Deep-South. With a strong management team in place and the commitment expressed to carry on despite unexpected challenges that hold the future of the project in doubt, Deep-South remains confident that it will resolve the impasse and gain a favorable court decision.

Moreover, the Company is also reviewing other attractive mining projects to provide more balance and diversification of its interests. As a result, another high quality exploration prospect may be secured as this process moves forward to resolve the impasse at Haib. The share price appears to have found a base that represents enormous value in the event that the Company is successful to re-establish its license for the Haib project. Thereafter Deep-South would be positioned to rapidly regain momentum and carry on with its business plan to resume a productive copper mine at the historic project. Regular updates shall be issued as this process continues. Smallcaps Recommendation: HOLD.

Smallcaps.us Advice: Buy	Price Target: $0.67	Latest Company Report (pdf)
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