KAZAKSTAN GOLDFIELDS SUBMITS US$28.6 MILLION CLAIM AGAINST GOVERNMENT OF KAZAKHSTAN
(from: newswire.ca )
TORONTO, Nov. 17 /CNW/ - Kazakstan Goldfields Corporation (KGFC-CDN) (the
''Company'') announces that it has submitted a Claim against the Government of
Kazakhstan to the International Court of Justice in The Hague, The
Netherlands. The Claim is for a total amount of US$28.6 million and relates
to the unilateral cancellation by the Government of the Company's Management
Contract (the ''Contract'') to manage, with an option to acquire, the gold
mines of the State-owned company JSC Kazakhaltyn.
The termination of the Contract in August, 1997 came five months after
the Company gave notice to the Government of its intention to exercise the
Company's option to convert its investment into full ownership of the mines.
Under the terms of the Contract, the Company was to invest a minimum of US$15
million on the mining properties by April 10, 1997, and it in fact invested a
total of $18.6 million prior to giving formal notice of its intent to convert
to ownership of the properties. The Contract specifically provides that the
Government cannot terminate the Contract once it has received this notice from
the Company.
The Claim, which was submitted today, also cites the occurrence of
certain force majeure events, of which the Government had been given notice
pursuant to the Contract on numerous occasions, which included the closure of
the Balkhash smelter as well as the serious lack of reliable electrical supply
and local social services and infrastructures. These events contributed to
the Company having to exercise its discretion, as permitted under the
Contract, to temporarily suspend operations at the mining properties due to
the frustrating, and at times dangerous, situations caused by these
occurrences. The Government currently continues to maintain the mines on a
care and maintenance basis. In addition, under its Claim the Company is also
claiming for the return of gold in concentrates owned by it valued at US$1.1
million which were in process at the State-owned Balkhash smelter when it was
shut down, and which continue to be retained despite a change in ownership of
this facility.
A. Thomas D. Griffis, Chairman of the Company stated that the Company
''will continue to seek discussion with the Government of Kazakhstan to
resolve this matter but will concurrently pursue all legal remedies and claims
for compensation available to it in Kazakhstan and internationally for this
improper and groundless cancellation of the Contract. After the significant
advances we made to rehabilitate these mining properties, which led to the
re-commencement of gold production, we certainly do not intend to walk away
without making every attempt to seek a resolution to this situation either
through negotiation with the Government or through the international
arbitration process under which our Claim is submitted for the return of the
funds and gold in process, as well as damages for breach of the Contract.''
There are currently 35,621,544 common shares issued and outstanding in
the capital of Kazakstan Goldfields Corporation.
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For further information: contact, A. Thomas Griffis, Chairman of the Board at (416) 867-9087 or Mike Campbell, Director of Investor Relations
at (416) 867-3979 |
