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asdc.kz
Kazakhstan Goldfields
Corporation Ready Settle
Dispute with Kazakh
Government
Kazakhstan Goldfields Corp. (KGFC) has accepted an offer from the
Government of Kazakhstan to begin a dialogue with the intent of
reaching a settlement to its dispute with the Government of
Kazakhstan. Both the Ministry of Energy, Industry and Trade and the
Department of State Property and Privatization of the Ministry of
Finance have offered to Gold Pool LLP, a 75% owned subsidiary of
KGFC to open discussion with the purpose of reaching a negotiated
settlement of its dispute. In accepting this offer, KGFC has agreed to
temporarily suspend its US$28.6 million claim against the
Government of Kazakhstan which was filed in the International
Court of Justice in The Hague Netherlands on November 17 1997.
Last fall, Kazakstan Goldfields Corporation (KGFC-CDN) (the
"Company'') submitted a Claim against the Government of
Kazakhstan to the International Court of Justice in The Hague, The
Netherlands.
The Claim was submitted for a total amount of US$28.6 million and
related 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 on November 17, also cited 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.
The company's spokesman said that after the significant advances
the company 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 was submitted for the return of the funds and gold
in process, as well as damages for breach of the Contract." |
