Placer faces US$270M claim in Kazakh feud
The Financial Post, Friday, May 16, 1997 at 03:38
Placer Dome Inc. is facing a demand for US$270 million from the
government of Kazakhstan, as Placer's decision not to develop the
Vasilkovskoye gold deposit continues to haunt it.
A Placer spokesman said yesterday the company views the demand from
the former Soviet republic as without merit.
''It's very far-fetched,'' said spokesman Hugh Leggatt before
Placer's stock (PDG/TSE) rose 50 cents to close at $25.90.
It is Placer that is owed money, said Leggatt. Placer says it is
owed US$35 million -- which it calls a refundable deposit paid
toward the Vasilkovskoye project -- and has gone to arbitration to
get the money back.
''The US$35 million is rightfully ours under the agreement, which
gave us the right to walk away,'' Leggatt said.
A New York mining analyst, however, said Placer was naive to make
the payment in the first place.
''It was a mistake to pay hard cash just to have a look at the
deposit,'' the analyst said.
Kazakhstan says Placer promised to spend US$270 million developing
Vasilkovskoye.
Vasilkovskoye was for years a huge open-pit gold mine operated by
the Soviet Union. It is believed to contain a further 13.5 million
ounces of gold, although the cost of recovering the gold is
thought to be high.
Nevertheless, a new would-be developer of Vasilkovskoye seems to be
waiting in the wings.
Malaysia Mining Corp. Bhd. is rumored to be on the verge of locking
up a 70% to 80% interest in Vasilkovskoye.
Malaysia Mining, based in Kuala Lumpur, operates tin mines and
explores for precious metals in east Asian countries. It had 1996
sales of US$220 million.
''We've heard MMC has got up to 80% of Vasilkovskoye, with a junior
partner holding the rest,'' said a Canadian mining executive whose
company is active in east Asia.
If so, Malaysia Mining will be at least the fifth company to take a
crack at Vasilkovskoye.
In April, Vancouver-based companies Teck Corp. and First Dynasty
Mines Ltd. -- one of financier Robert Friedland's stable of
companies -- had a joint bid to develop the property rejected by
the Kazakhstan government.
It was the second run Teck and First Dynasty had made for
Vasilkovskoye.
Placer's deal to develop the property caused controversy when it
was announced in April 1995.
In choosing Placer, the Kazakhstan government scuttled an open
bidding process in which more than a dozen mining companies were
participating.
Also, there was controversy because an Australian company, Dominion
Mining Ltd., had spent several million dollars exploring the
project and believed it had exclusive negotiating rights.
The European Bank for Reconstruction and Development had refused to
finance the project because of the manner in which Placer Dome's
participation was arranged.
Placer said it walked away from Vasilkovskoye because it felt it
could achieve bigger profits from projects where it held a larger
equity interest. It announced its withdrawal on Oct. 4, 1995.
Under the terms of its Vasilkovskoye deal, Placer would have owned
23% and the Kazakhstan government would have held roughly 50%,
with a group of western investors owning the rest.
''It's a good deposit, but we decided it would take a lot of our
resources away from projects that had a greater benefit to us,''
Leggatt said.
Leggatt said Placer is not unnerved by the US$270 million demand
from Kazakhstan, and still has faith in the arbitration process.
''The process is there to resolve this kind of conflict, so we are
hoping it will have a fair outcome for everybody.''
The arbitration is being held under the United Nations Commission
on International Trade and Law.
Thus far, both Placer and Kazakhstan have selected judges and those
two individuals are, in turn, to jointly select a third.
*** Infomart-Online ***
The Financial Post, Wednesday, October 01, 1997 at 04:58
Toronto-based World Wide Minerals Ltd. said yesterday it is
walking away from a US$23-million investment in a uranium project
in Kazakhstan.
The decision comes after the government of Kazakhstan refused in
July to issue a uranium export licence to the company, which has
developed a uranium mine in Stepnogorsk, northern Kazakhstan.
World Wide says the government has ''effectively abrogated'' its
agreement covering Stepnogorsk and other uranium projects.
The company will try to recoup the money invested in the project,
plus compensation for lost profits, but it provided few details
during a conference call with investors yesterday.
If negotiations fail, World Wide will begin legal and ''other
appropriate actions,'' chief executive Paul Carroll said.
It is not the only Canadian miner to have had a rough ride lately
in Kazakhstan.
Placer Dome Inc. and Kazakstan Goldfields Corp. both say the
government owes them millions of dollars after reneging on
agreements.
In its most recent annual report, the mining company told its
shareholders Kazakhstan was a country with ''many hurdles to
overcome,'' but one that is making a strong drive toward
privatizing its economy.
The company, with a recently arranged US$60-million line of credit,
says it is pursuing a uranium project in Mongolia and gold
exploration in China.
Shares of World Wide (WWS/TSE) fell 4 cents to 43 cents yesterday
on volume of 158,650 shares. |
