Kyrgyz Government Seeks New Investor for Gold Deposit

In January of this year, Kyrgyz government has issued a decree to find new investors for Jerooy gold deposit exploitation. The decree signed by the Prime Minister Felix Kulov on the New Year’s eve said the joint enterprise Talas Gold Mining Company had not fulfilled the license agreement conditions on the deposit exploitation and had ruined the plan realization.

According to the decree quoted by Gazeta.Kg website, Talas Gold Mining Company (67 percent of UK’s Oxus Gold, 33 percent of Kyrgyz state corporation) had delayed the project realization for many years. The company’s foreign member reportedly continued to work on the deposit even after its license had been annulled, referring to its correspondence with former Kyrgyz PM, Nikolai Tanayev.

The government ordered the committee on state property administration to study the proposals by other foreign investors who are ready to exploit the Jerooy gold deposit under conditions favorable for Kyrgyzstan. The committee should also choose an auditor to state the value of Talas’ expenses, and find the means to pay salary for Talas’ employees if the company is closed.

The government also ordered the Prosecutor General’s office to check whether Talas’ activity had not violated the law.

In November, Kulov sent a letter to Talas’ Director General, Stephen Westhead, saying the government had made a decision to reject the license restoration for the company, according to the conclusion made by the international legal company Davenport Lyons, as well as by Kyrgyz lawyers. In the beginning of December, neither Talas, nor Oxus Gold were aware of this conclusion.

In response, Talas sent letters to Kyrgyz President and PM asking to hold a meeting to discuss the situation. On December 5, a delegation led by Oxus’ CEO, William Trew, visited the Kyrgyz capital of Bishkek but was not received by the country’s leadership. The company’s director, Richard Wilkins, said that time he had no doubt on the company’s right to exploit the Jerooy deposit and would defend its rights at the international arbitrage court. Oxus also said that if Kyrgyzstan completely rejected to restore the license for Talas, the company would remove all the equipment from the deposit. Wilkins quoted by Gazeta.Kg said in such a case the current level of readiness for the exploitation could be restored not less than in four years.

The license was first cancelled by the former PM Tanayev, after Kyrgyzstan had recognized that Oxus had not fulfilled its obligations to invest in the deposit. The new government that came to power after the revolution of 2005 found no reason to restore the license.