Capital Drilling Limited (LON:CAPD) has said it is currently engaged with advisors in Tanzania to determine the practical application of recent legislative changes in the African country on its business.
In a statement simply detailing the new legal and regulatory framework governing the natural resources sector in Tanzania, the AIM-listed drilling solutions company highlighted Clause 102 which legislates the provision of goods and services by Tanzanian entrepreneurs.
The firm pointed out that, under the clause, “mineral right holders shall give preference to goods or services produced or available in Tanzania. Where goods or services are not available in Tanzania a Joint Venture shall be established with a 25% shareholding from a local Tanzania company. “
READ: Good results from Capital Drilling overshadowed by Tanzania uncertainty
It noted that a local Tanzania company is defined as a company incorporated under the Tanzanian Companies Act, with 100% shareholding by Tanzanian citizens, or a company in a joint venture partnership with Tanzanian citizens with a shareholding of not less than 51%.
In an update published week, Capital Drilling reported a strong recovery in activity in its latest quarter but cautioned over the uncertainty in Tanzania due to the recent changes to the country's mining legislation.
The mining driller has a contract with Acacia Mining (LON:ACA) at North Mara in Tanzania.
Jamie Boyton, Capital’s executive chairman, said then that the legal changes in the country had added more uncertainty to the outlook for the second half.”
He added: “The changes were unexpected and the practical interpretation is at this stage unknown. We will continue to monitor developments closely.”