The International Arbitration Court in Moscow ruled in May
that TSX-listed rare earths junior Stans Energy Corp. legally
acquired the Kutessay II rare earths project in Kyrgyzstan.
The court found that the company,
which claimed its rights to develop the project following its
acquisition in 2009, is lawfully entitled to continue work at
the past-producing mine.
The acquisition was disputed by the
State Prosecutor Officer (SPO) of the state of Kyrgyzstan,
which started legal proceedings against the company in April
This ruling validates our
position as open and honest business partners for the Kyrgyz
Republic, Rodney Irwin, Stans CEO, said.
Stans, defending its acquisition,
appealed to the International Arbitration Court, accusing the
government of Kyrgyzstan of expropriation and seeking a $1.18bn
compensation for losses and damage.
The ruling sets up a
circumstance where there are direct repercussions for the
Kyrgyz government for not following international norms and
safeguarding investment, David Vinokurov, Stans
vice president of corporate development, told
This should provide an
impetus for the government to co-operate with Stans so that
they can demonstrate to the international investment community
that the rule of law is respected and that they are indeed,
open for business, he added.
Irwin said that Stans intends to
continue negotiating a settlement with the inter-departmental
working group of the government.
Vinokurov told IM
that Stans is looking to secure a mutually beneficial licencing
agreement with the Kyrgyz authorities that would allow the
company to restart the development of Kutessay II and eliminate
a huge liability for the government.
The International Arbitration Court
will prepare a written ruling in the next three months, which
will provide details about the final damages amount to be paid
Appeal against Inter-District
The company has recently filed an
appeal against the Inter-District Court of Bishkek, which ruled
in favour of the SPO on the acquisition of its 20-year licence
for Kutessay II, in 2009.
It is our hope that we will
receive a fair and impartial trial based on the evidence at
hand. Should we win, we would be glad to continue working in
Kyrgyzstan, although in a strictly regimented relationship with
the authorities, Vinokurov told IM.
He explained that Stans wants to be
guaranteed a stable environment, free from third party
agitation and without unnecessary delays to continue the
development of the project.
We need to ensure these
criteria in order to safeguard our shareholders
investments, Vinokurov said.
If we should lose the appeal,
and the further supreme court appeal if necessary, then we
would be forced to seek restitution that we are entitled to by
the International Arbitration ruling, he added.
Stans plans at
Vinokurov told IM
that Stans is planning to resume pilot testing of new milling,
cracking and separation technologies that the company has been
able to develop with the assistance of VNIIHT, the Russian
Research Institute of Chemical Technology division of
The tests would form the
basis of the feasibility study that has been delayed due to the
present court cases, Vinokurov said.
Stans completed the purchase of the
Kashka rare earths processing plant in May 2011.
Kashka requires feedstock,
and that is dependent on the opening of the mine. We have
conducted operational tests at the plant and have been able to
produce various oxides and metals during the summer of
2012, Vinokurov told IM.
He added that the plant is
currently 90% operational and can process concentrates for
third parties, providing they are free from radioactive
Stans is focused on the
production of rare earth oxides, metals and alloys as they
determine higher sales volumes compared with
concentrates, Vinokurov explained.
Restarting of operations
would be dependent on reaching an agreement with Kyrgyz
authorities on a new licence agreement, Vinokurov
The distribution of rare earth elements at Kutessay II
consists of 52% light rare earths (LREE), including 16.6%
lanthanum, 19.7% cerium and 8.2% neodymium, and 46.1% heavy
rare earths (HREE), of which 26.7% is yttrium, 6.1% dysprosium,
3.6% gadolinium and 3.2% erbium.