Indiana Resources seeks ATO ruling on Tanzanian settlement payment for Ntaka Hill nickel project

Indiana Resources (ASX: IDA) has sought an Australian Tax Office (ATO) ruling on the impact of a payment of approximately $50.1 million received as the final tranche of a settlement with the Tanzanian government.

The parties involved announced in July 2024 that they had reached a settlement of approximately $150.1m to resolve a dispute over the Ntaka Hill nickel project, stemming from Tanzania’s 2018 mining law changes that cancelled retention licences.

Indiana is seeking confirmation from the ATO on the most efficient manner available to disburse the funds to the company’s shareholders.

Capital return ruling

The company has applied for a tax ruling from the ATO to make a payment to shareholders as a capital return.

Currently, the maximum amount that can be paid as a capital return is $32.4 million.

The board is targeting a return to shareholders before 30 June 2025, subject to the company obtaining the necessary shareholder and regulatory approvals, dependent upon the tax ruling.

Tanzanian tax issue

Indiana has also revealed that the Tanzanian Revenue Authority has issued a “Notice of Jeopardy Assessment” to its subsidiary Nachingwea Nickel Limited (NNL).

The notice alleges that NNL owes taxes to the government in respect of the settlement amount.

Indiana denies that any such tax is due and owing, informing the Tanzanian Revenue Authority and the Solicitor General’s office that a tax assessment would constitute a breach of the settlement deed.

Further dispute

In the meantime, a further dispute has arisen among the shareholders of Ntaka Nickel Holdings (NNHL), one of the claimants against the Tanzanian government, in relation to the distribution of funds.

NNHL and two of its subsidiaries are claimants in the dispute with the Tanzanian government, for which the final payment instalment has now been received.

Mauritius-incorporated Loricatus Resource Investments has issued a notice of arbitration regarding the distribution of settlement funds received from Tanzania.

Indiana has told its shareholders that it is awaiting a timeline for the arbitration hearing.