Uzbek Court Rules in Favor of Amantaytau

- Oxus Gold reported in early January 2007 that the Amantaytau Goldfields (AGF) joint venture in Uzbekistan (50% Oxus/50% government of Uzbekistan) had successfully appealed against fines and penalties imposed by a regional court at the end of October 2006. As a result of the appeal, fines and penalties totaling about $208 million were dismissed. Of that total, $203.6 million related to alleged transgressions in the operation of AGF’s overseas foreign currency bank account. AGF maintained that it was authorized by decree of the Cabinet of Ministers to operate the account and that its operations were conducted legitimately and with the full knowledge of the relevant Uzbek authorities, including the Ministry of Finance and the Central Bank.

The State Tax Authority had the option of appealing the decision of the Regional Appeal Court. Whether it would do so was not yet known. AGF was continuing to appeal another $17 million in taxes and customs duties claimed by the regional authorities.

AGF also reported that its permit to mine precious metals, which is reviewed every five years, was extended on Dec. 27, 2006.

AGF owns the Amantaytau open-pit gold mine in the Kyzylkum region of Uzbekistan. Oxus Gold is the operator. The mine produced 147,000 oz of gold in the company’s fiscal year ending June 30, 2006, processing oxide ores. AGF has begun construction for an underground sulphide mine having design capacity to produce about 180,000 oz/y.

In August 2006, the government of Uzbekistan seized the assets of the Zarafshan-Newmont joint venture and of Oxus Gold’s 86%-owned subsidiary Marakand Minerals (E&MJ, Sept. 2006, p. 5). Marakand had been developing the Khandiza massive-sulphide polymetallic project in Surkhandarya province since 1996 and had completed a feasibility study of the project in September 2004 that confirmed the project as financially and technically robust. The court decision regarding AGF did not change the national government’s earlier action regarding Marakand.