Kyrgyz Supreme Court rejects Chinese claims over Stans Energy mine

By bne IntelliNews November 19, 2014

Kyrgyzstan's Supreme Court has upheld a ruling by the Bishkek city court that Chinese firm Baotau Hongbo has no rights to the rare earth Kutessay II mine, Canadian company Stans Energy, which claims to be the mine's rightful owner, said in a statement on November 18.

Baotau Hongbo owned a mining licence for Kutessay II between 2006 and 2009. The firm brought suit against the Kyrgyz State Agency for Geology and Mineral Resources, which issued a new mining licence for Kutussay II to Stans Energy in December 2009, with the intention to reclaim licence rights to Kutessay II. The Inter-district Court of Bishkek first ruled in favour of Baotau. An appeal was then filed by Stans Energy to the Bishkek City Court, which eventually overruled the lower court ruling and held that Baotau had no rights to Kutessay II. Baotau also appealed, but its appeal has now been definitely rejected by the Supreme Court.

It is not clear yet if the Kyrgyz government is willing to comply with the latest Supreme Court's ruling as authorities notified the company earlier this month that they were moving to revoke its mining licenses for the Kutessay II and Kalesay properties, another rare earth deposit close to Kutessay II, as confirmed by Stans Energy in a statement on November 13.

Stans Energy, which has not resumed operations at Kutessay since 2012, is now seeking the enforcement in Canada of a ruling by an arbitration court in Moscow that awarded the company $118.2mn in refunds and damages. The company expects a definitive ruling by the Ontario Supreme Court to come through in the coming weeks. In the meantime, the same Ontario Supreme Court issued a preventive injunction on October 14, which, among other things, prohibits the Kyrgyz Republic "from selling, disposing, exchanging, assigning, transferring, pledging or encumbering" 47mn shares worth $255mn in the capital of Centerra Gold owned by the government through state mining company Kyrgyzaltyn. Centerra Gold owns and operates the country's flagship gold Kumtor mine. The Kyrgyz state owns a 32.7% stake in Centerra Gold. Stans Energy has no direct interest in either Centerra Gold or Kumtor, but the state's stake in Centerra Gold is often perceived by foreign invstors and courts as the country's only valuable foreign asset.

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