Oxus Mining PLC said the Kyrgyzstan Government's State Agency for Geology and Mineral Resources has annulled the mining licence issued to Talas Gold Mining Co for the Jerooy gold deposit in Kyrgyzstan.
Talas Gold is 66.67% owned by Oxus subsidiary Norox Mining Co Ltd and 33.33% owned by Kyrgyzaltyn, Kyrgyzstan's state-owned mining company.
Norox is disputing the annulment of the licence, which was issued March 6, 2000.
"The annulment of the mining licence does not affect Norox's rights to develop the Jerooy project, and complete the bankable feasibility," Oxus said.
Norox regards the annulment as invalid on the basis that the licence agreement provided for the completion of a feasibility study based on certain tax privileges for the Jerooy project.
"These tax privileges have not been forthcoming and the development of the project therefore did not commence, due to the historically low gold price."
"Following the recent rise in the gold price, Norox confirms that it is currently working to complete a definitive feasibility study, based on the existing Kyrgyz tax regime, by Sept 30 2002, in accordance with a work programme recently agreed at a general meeting of shareholders of Talas Gold.
"This study, which is being undertaken by Wardell Armstrong of the UK, will form the basis for project finance negotiations with appropriate lending institutions.
"Norox has also commenced discussions with the Kyrgyz Government with a view to overturning the annulment, and obtaining a new licence agreement based on the current work programme."
Norox is 96% owned by Oxus, and 4% by Conquest Resources Ltd of Canada.
Oxus' principal project at Amantaytau in Uzbekistan is unaffected, it said.
AFX News, July 8, 2002