World Wide launches Kazakstan lawsuit

As threatened last fall, Toronto-based World Wide Minerals (WWS-T) and Denver-based uranium trader Nuclear Fuel Resources have initiated legal action against the Republic of Kazakstan in the United States Federal District Court in Washington, D.C.

The action seeks damages of at least US$220 million in connection with Kazakstan’s cancellation last August of World Wide’s management contract and purchase option for the Tselinny Gorno-Khimicheskii Kombinat (TGK) uranium project near the city of Stepnogorsk in northern Kazakstan (T.N.M., Aug.

18/97).

Nuclear Fuel Resources’ involvement stems from its exclusive contract with World Wide to market uranium produced at TGK.

Before withdrawing from Kazakstan last fall, World Wide had been active in the country through its 95%-owned subsidiary KazUran, which was also denied a uranium export licence and its right, under a separate agreement, to forge a joint venture with state-owned KazAtomProm to develop three uranium deposits in southern Kazakstan.

World Wide says that the government of Kazakstan has acknowledged, through official channels, its obligation to compensate the company for its lost investment, which World Wide estimates has grown (with interest) to over US$25 million. However, no specific settlement offer has been made.

World Wide also reported its financial results for the year ended Dec. 31, 1997. The company recorded a loss from operations of $286,689, before provision for impairment in the carrying value of its investment in Kazakstan. After the provision, the net loss is $30.2 million (or 58cents per share). This compares with a net loss of $964,329 (3cents per share) in 1996.

Revenue for 1997 totalled $3.55 million, including $1.31 million from the sale of uranium concentrates, compared with a total revenue of $287,352 in 1996.

At year-end, World Wide had recorded loans, accrued interest and management fees totalling $22.3 million related to the TGK project. In addition, $7.9

million had been invested in assessing, financing and developing its strategic investment in Kazakstan.

Meanwhile, World Wide says the production start for its Dornod uranium mine in Mongolia, which had been expected to be operating at the rate of 800,000 lbs. U3O8 per year by mid-1998, has been rescheduled for later in the year.