WORLD WIDE RECEIVES RESPONSE TO KAZAKHSTAN LAWSUIT
TORONTO, July 9, 1999: World Wide Minerals Ltd. (TSE: WWS) announced today that all three of the defendants to its US Federal Court action had now filed a response in Court in Washington, D.C. In filings with the Court dated July 2 but only received by World Wide this week, the defendants, (i) the Republic of Kazakhstan, (ii) Kazatomprom, the wholly State-owned Kazakhstani uranium producer and (iii) Nukem, Inc., a US subsidiary of RWE AG of Essen Germany, have challenged the jurisdiction of the US District Court on various technical grounds. In a separate step, Kazakhstan has offered to arbitrate the dispute with World Wide, an option that had been available to Kazakhstan from the outset.
The lawsuit arose out of the unlawful termination of a 1996 agreement under which World Wide took over the management of certain uranium mining and processing facilities in Kazakhstan, the production from which was to be marketed freely in the international uranium market. The Company also had acquired the right to redevelop additional existing uranium mines and to develop new deposits. The Company has estimated that at least 350 million lbs. of uranium concentrates (U3O8) would have been attributable to the Company under the arrangements, in mines capable of being operated in the lowest quartile of costs in the world. Total cash investment by World Wide in the uranium operations in Kazakhstan to date is over US$23 million. The majority of this investment was by way of a secured loan.
In 1997, Kazakhstan failed to issue requisite export licenses to permit export of Kazakhstani U3O8 to the US and Taiwan with the result that the Company was forced to discontinue its operations. In retaliation, in August 1997 Kazakhstan unilaterally cancelled the Company's agreement. After unsuccessful attempts to resolve the dispute, the Company filed suit in May, 1998 in US Federal District Court, in Washington, DC., claiming $220 million in reimbursement of the investment and damages against Kazakhstan and Kazatomprom. In an amended filing in February, 1999, the damage claim was increased to approximately $300 million, Nukem Inc. was added as a third defendant and a claim was made against all defendants under the US Racketeering Influenced and Criminal Organization (RICO) Act which would allow the award of treble damages and recovery of litigation costs.
The reason eventually given by Kazakhstan for the refusal to issue the requisite export licenses was a secret agreement between a predecessor of Kazatomprom and Nukem, Inc. allegedly granting Nukem the exclusive right to sell 100% of Kazakhstani U3O8 which could be imported into the US under applicable US import quotas. The existence of this alleged agreement was not disclosed to World Wide by Kazakhstan during four months of due diligence and contract negotiations in 1996, and the existence of any exclusive marketing rights was strongly denied by senior Kazakhstani officials. To date, Nukem has refused to produce any evidence that it has such a right, claiming that its agreement is "confidential."
World Wide's legal counsel are of the opinion that its action is well founded in fact and law and that it will successfully defeat the technical challenges to jurisdiction. A response to the challenges will be filed in August 1999. |
