Oxus Gold reported in early March 2011 it had appointed Amsterdam & Peroff LLP (A&P), who specialize in dealing with disputes involving sovereign states, to act on its behalf regarding Oxus’ 50% interest in Amantaytau Goldfields (AGF) in Uzbekistan. Oxus previously reported the Uzbek shareholders of AGF, being Uzbek state-owned entities, had agreed, in principle, to acquire Oxus’s 50% shareholding in the company for cash, at a price to be agreed. An extensive audit of AGF’s financial and economic activities was undertaken by a commission appointed by the Ministry of Finance in Uzbekistan.
However, Oxus reported, “The practices employed by the audit commission have led Oxus Directors to conclude that there is no evaluation of the assets taking place in good faith, and there is a risk of the audit committee using the process to find reasons to justify putting AGF into liquidation.”
Subsequently, on March 21, Oxus reported that certain licenses and permits essential for AGF’s ongoing operations had not been renewed. “As a result, Oxus has been forced to declare force majeure under the management and services agreement relating to AGF and the charter of AGF. Oxus is no longer able to comply with its obligations under either of these agreements, specifically as regards its obligations to manage AGF. Accordingly Oxus’ contractual obligations under these agreements have currently been suspended,” the Oxus statement said.
A&P has advised the government of Uzbekistan that Oxus intends to move directly to international arbitration to protect the interests of its shareholders in the event that an agreement cannot be reached to dispose of its shareholding in AGF for fair value or where there is any attempt to force AGF into liquidation.
Surface mining at Amantaytau has been winding down due to diminishing resources, and plans to develop an underground mining operation have yet to bear fruit. AGF reported gross revenue for the third quarter of 2010 of $6.05 million, an operating profit of $3.16 million, and a profit after exceptional items, interest, and tax of $1.80 million, with 50% of these results being attributable to Oxus. During the period, AGF produced 1,427 oz of gold and 243,280 oz of silver. Cash operating costs were $383/gold equivalent oz, and total production costs were $599/gold equivalent oz.