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Gold/Mining/Energy : Southern Metals - SUH.V (formerly Aranlee Res. - ARB.V)
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To: Jim Kasten who wrote (196)10/1/1997 7:35:00 PM
From: David R. Schaller   of 254
 
Jim, I copied this from a news release from World Wide;

Could you please comment on its implications for Aranlee?

>Because the Republic of Kazakhstan unilaterally expropriated the company's management agreement for the TGK project, contrary to the express terms of the agreement, and effectively abrogated the agreement for development of additional in situ leach mines and deposits in Kazakhstan, World Wide suspended direct investment in that country several months ago pending clarification of its legal position.

Paul A. Carroll, chairman and CEO of World Wide, stated that "the effect of the unilateral cancellation of our agreements is to reverse the privatization program for the uranium industry in that country. This flies in the face of everything that the government of Kazakhstan says that they are doing to attract foreign investment - and which was what attracted us to the country in the first place." The TGK project has been placed in bankruptcy by the government and management has been taken over by a government agency. This same agency was a direct competitor to World Wide for export licences and prevented completion of a uranium sale to a US utility.

Attempts by the government to obtain local bank financing for the TGK project so far have been unsuccessful. Large numbers of qualified
professional staff and skilled workers have been leaving. There has been no production of uranium by TGK since World Wide suspended operations. To date, World Wide has invested directly and indirectly over US$23 million in the TGK project and in commencing to implement the agreement to redevelop the in situ leach deposits in southern Kazakhstan. Mr Carroll said "we have done more than we originally bargained for in terms of financial support for the projects. They just keep demanding more - but they do not honour their own commitments." As a result of the suspension of operations, huge arrears of unpaid wages and pension benefits are accumulating and, despite the approach of winter in the region, electric power, heat and hot water are now intermittent.

World Wide is pursuing its legal remedies for rectification of the Kazakhstan agreements, failing which, it will aggressively seek
compensation for its expropriated agreements and loss of investment
opportunity and profit. Further details will be forthcoming on these
matters as they unfold.>

Thanks for any insights you can share, Dave
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