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UK: Kyrgyzstan President's attack sends Oxus shares crashing

by Saeed ShahThe Independent
February 4th, 2006

Oxus Gold shares crashed 17 per cent yesterday as the City reacted to news that the President of Kyrgyzstan had called its operations in the country "irresponsible and unlawful".

The reaction came despite new protestations from Oxus that it had done nothing wrong. The company has spent $46m (26m) developing the Jerooy gold mine in Kyrgyzstan, bringing the development of the project close to completion.

However, Oxus also revealed it had offered concessions to the Kyrgyzstan government, in a last-ditch attempt to save the project.

Oxus, which is listed on AIM, said: "The company remains committed to developing the Jerooy project in the fastest possible time and has indicated to the Kyrgyz government that it is willing to improve the returns to the Kyrgyz people from the joint venture, if appropriate."

Kyrgyzstan has revoked the licence Oxus held to develop the mine, accusing it of failing to meet conditions. The company said yesterday construction at the site has been conducted in accordance with a licence issued by the Kyrgyz State Committee for Architecture and Construction on 24 May 2004. Building of the processing plant started early last year after the project designs and other documentation had been through an extensive approval process by the relevant state bodies, Oxus said, and ongoing construction continues to be monitored regularly in accordance with state procedures.

The company said: "At no time has Oxus or [its subsidiary] Talas Gold Mining Company been advised by any state body to cease construction."

It emerged this week Tony Blair had tried to intervene on behalf of Oxus by writing in support of its project to the President of Kyrgyzstan, Kurmanbek Bakiyev. However, the Kyrgyz government released a letter to the press from its leader - reported in The Independent and other newspapers yesterday - that rebuffed Mr Blair's efforts.

The Prime Minister had suggested the country was breaching an anti-corruption initiative it had signed up to, but Mr Bakiyev strongly denied this.

Oxus Gold shares crashed 17 per cent yesterday as the City reacted to news that the President of Kyrgyzstan had called its operations in the country "irresponsible and unlawful".

The reaction came despite new protestations from Oxus that it had done nothing wrong. The company has spent $46m (26m) developing the Jerooy gold mine in Kyrgyzstan, bringing the development of the project close to completion.

However, Oxus also revealed it had offered concessions to the Kyrgyzstan government, in a last-ditch attempt to save the project.

Oxus, which is listed on AIM, said: "The company remains committed to developing the Jerooy project in the fastest possible time and has indicated to the Kyrgyz government that it is willing to improve the returns to the Kyrgyz people from the joint venture, if appropriate."

Kyrgyzstan has revoked the licence Oxus held to develop the mine, accusing it of failing to meet conditions. The company said yesterday construction at the site has been conducted in accordance with a licence issued by the Kyrgyz State Committee for Architecture and Construction on 24 May 2004. Building of the processing plant started early last year after the project designs and other documentation had been through an extensive approval process by the relevant state bodies, Oxus said, and ongoing construction continues to be monitored regularly in accordance with state procedures.

The company said: "At no time has Oxus or [its subsidiary] Talas Gold Mining Company been advised by any state body to cease construction."

It emerged this week Tony Blair had tried to intervene on behalf of Oxus by writing in support of its project to the President of Kyrgyzstan, Kurmanbek Bakiyev. However, the Kyrgyz government released a letter to the press from its leader - reported in The Independent and other newspapers yesterday - that rebuffed Mr Blair's efforts.

The Prime Minister had suggested the country was breaching an anti-corruption initiative it had signed up to, but Mr Bakiyev strongly denied this.





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