LONDON (Mineweb.com) --Perhaps 2007 will be a much better year for AIM listed Oxus Gold (OXS.L). The company announced today that it has successfully appealed against the fines and enormous penalties imposed by an Uzbekistan regional court. In October, almost immediately following the virtual expropriation of Newmont’s Zarafshan gold operation through a similar procedure. Oxus was landed at that time with retrospective back tax payments and fines equivalent to more than US$200 million in relation to its Amantaytau Goldfields (AGF) gold mining operations.
As a result of the appeal, which was heard in the regional court on 28 December, the 2006, fines and penalties totalling are no longer payable. In addition, various restrictions imposed on AGF's operations as a result of the earlier ruling, have also been lifted.
However, the company warns, the State Tax Authority can appeal the decision of the Regional Appeal Court although it is not yet known if they intend to do so.
AGF continues to appeal approximately $17 million of taxes and customs duties claimed by the regional authorities. This amount includes approximately $7 million of recoverable VAT. It is expected that these appeals will be heard
during January 2007.
AGF also reports that its permit to mine precious metals, which is reviewed
every five years, was extended on 27 December 2006. This permit was initially issued in 1996, renewed in 2001, and has now been renewed again in 2006 and indicates that government authorities are satisfied that AGF is properly conforming to mining, environmental, and health and safety regulations in its mining activities.
According to the Ferghana.Ru Russian news agency, Oxus may have been helped in its endeavours in negotiation with the Uzbek government by Swiss registered Zeromax GmbH which bought 16% of the company’s stock for £12.255 million and seems to be planning to raise its stake to 20%.
Zeromax is said to be a powerful company with excellent connections in Uzbekistan, and is involved in a number of joint ventures there – mainly in oil and gas and has forged strong working relationships with the Uzbek Government.
Zeromax is owned by Miradil S. Djalalov, a Tashkent entrepreneur who founded the company in 2000. Mr. Djalalov has agreed to join the Oxus board as a non-executive director upon completion of the agreed investment. It has also been agreed that Zeromax will appoint a second director, who will serve as an executive, in the event that its shareholding in the Company exceeds 20%.
Djalalov is said to have strong connections with the Uzbek Government of President Islam Karimov and there have to be some suspicions out there that the deal with Zeromax has been forced on Oxus as a condition for it being allowed to continue to operate in Uzbekistan. Even so, if the alternative was for the company to walk away from its big investment in that country, then a dilution in shareholder value may be a small price to pay.
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