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Kyrgyzstan Review, 10 years ago




[21.08.2OO2] Conquest Resources Ltd: Jerooy Mining Licence Status, Feasibility Study At Jerooy Delayed

Conquest Resources Ltd. (TSX-V: "YQR") reports that completion of the Bankable Feasibility Study on the 2 million ounce Jerooy Gold Project in the Kyrgyz Republic originally scheduled for September 2002 will be delayed.
 
Conquest has the option, dependent on the results of the Feasibility Study and exercisable by March 31, 2003, subject to regulatory approval, to acquire a 67% interest in the Jerooy Project through the purchase from Oxus Mining plc (London AIM: "OXS.L") of a 100% interest in the project holding company Norox Mining Company Limited for $7M, payable $3.5M in Conquest shares and $3.5M in cash. The Kyrgyz State Mining Company J.S.C. Kyrgyzaltyn holds the remaining 33% interest in the project.
 
Under the terms of the previously announced (May 2, 2002) Share Sale, Option and Joint Venture Agreement with Oxus, Conquest has agreed, subject to certain conditions, to fund in stages up to $1 million to complete, amongst other things, a bankable feasibility study and thereby acquire up to a 15% interest in Norox. To date Conquest has earned a 7% interest in Norox.
 
Wardell Armstrong & Associates plc of the United Kingdom was appointed to undertake the feasibility study and substantial progress has been made towards completion of the technical parts of the study. An audit of the reserves completed by Wardell Armstrong confirmed a mineable reserve for the open pit of 1.3 million ounces and an underground resource of 0.68 million ounces of gold (previously announced July 8, 2002). The report proposed an open pit followed by an underground mine. Wardell Armstrong have also finalized the open pit and underground mine design, optimised the production rate and mine production schedules, finalized the process and plant design, completed paste test work and design and evaluated various tailings disposal options. The financial aspects of the study, including the capital and operating costs, remain to be completed.
 
However, as previously announced, in June 2002 the Government of the Kyrgyz Republic published an annulment of the mining licence for the Jerooy Project issued to Talas Gold in March 2000, apparently because of delays in the completion of the feasibility study and because development of the project had not commenced. Talas Gold, which is 67% owned by Norox and 33% by Kyrgyzaltyn, was granted the exclusive right to develop the Jerooy Gold Deposit pursuant to a Joint Venture Agreement dated September 9, 1998. Conquest has been advised that Norox considers the purported annulment of the licence invalid since the completion of the feasibility study was dependent upon the introduction of various tax arrangements, which have not yet been forthcoming.
 
Conquest has now been advised by Oxus that on August 5, 2002 the Kyrgyz Government adopted a Resolution on Measures for the Acceleration of the Development of the Jerooy Gold Deposit and ordered the State Agency on State Property and Direct Investment to search for an investor capable of quick development of the Jerooy deposit and to make proposals for the development of the Jerooy deposit for consideration by the Government.
 
At the same time, the Joint Venture Agreement with Kyrgyzaltyn continues in full force and effect and is unaffected by the annulment of the mining licence. Conquest has been advised that Norox continues to seek an amicable resolution to this matter by way of good faith negotiations in accordance with the terms of the Joint Venture Agreement. Kyrgyzaltyn has confirmed in writing to Oxus and Norox its willingness to "carry on negotiation in the spirit of good will" and is ready to consider "all suggestions in an attempt to find a solution for settlement of the existing situation". Kyrgyzaltyn has appointed delegates for such negotiation and the parties have agreed to a deadline of October 19, 2002 to conclude such negotiation. Conquest understands that if a mutually acceptable agreement is not reached by October 19th then Norox will seek a resolution under International Arbitration as provided in the Joint Venture Agreement.
 
Under the circumstances, Norox has ceased further work on the Jerooy project until these issues are resolved and has informed the Kyrgyz authorities that the Feasibility Study due for completion in September will not be delivered.
 
Terence McKillen, President of Conquest said today: "Conquest holds an option to evaluate the Jerooy Project and purchase a 67% interest via the acquisition of Norox. Completion of the Feasibility Study is an important part of this evaluation. Until the issues surrounding the mining licence at Jerooy have been resolved Conquest will not undertake any further work on the Feasibility Study."
 
"The exercise by Conquest of its option to acquire Norox will be dependent on, amongst other things, the outcome of the negotiations between Norox and Kyrgyzaltyn; the negotiation of a satisfactory foreign investment agreement, including terms of a new licence agreement, with the Kyrgyz authorities; and regulatory approval."
 
About Conquest
 
Conquest holds an option to acquire an indirect 67% interest in the 2 million ounce Jerooy gold project in Kyrgyz Republic.
 
Conquest is also carrying out exploration in Ontario on its Red Lake gold property, strategically located in the heart of the Red Lake gold camp, immediately adjacent to Goldcorp's high grade Red Lake mine, and on its Aurora gold property, located in the Detour gold camp, on which earlier high grade gold intercepts will be followed up by drilling later this year.
 
There are currently 31,911,139 shares of Conquest issued and outstanding.
 
Canadian Corporate News. August 21, 2002

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