Oxus Gold divests Kyrgyz project (April 02, 2007)

Oxus Gold (OXUSF-O, OXS-L) has sold its interest in the operating company that had developed the Jerooy gold deposit in Kyrgyzstan, as part of a transaction with another London-listed junior, KazakhGold Group (KZG-L).

Oxus sells its interest in Talas Gold Mining, which had held the Jerooy project until the Kyrgyz government lifted Talas’s development licence in late 2005. It also transfers Oxus’s half of a Romanian joint venture with KazakhGold, and several Turkish properties owned by a public subsidiary, Marakand Minerals (MRKMF-O, MKD-L). The Marakand transaction requires the approval of Marakand’s board of directors.

In exchange, Oxus gets 3.5 million shares of KazakhGold, worth about US$72 million at market prices; the shareholding represents about 7% of KazakhGold.

Oxus said it would distribute “all or a large portion” of the KazakhGold shares to its shareholders.

Talas Gold Mining, in which Oxus owned a two-third stake and the Kyrgyz state mining agency, Kyrgyzaltyn, one-third, was stripped of its development licence when Kyrgyzaltyn and the Kyrgyz Mines Ministry said Oxus had not met development timetables for the Jerooy mine. An Austrian-based company, Global Gold Holding, is now the government’s partner at Jerooy.

If KazakhGold can recover development rights to the project, Oxus receives payments of up to US$80 million in later installments.

Another company with property woes in Kyrgyzstan, CGA Mining (CGA-T, CGX-A) and Thistle Mining (THTLF-O, TMG-L) have amended their deal under which CGA, which had held the Taldy Bulak gold project in Kyrgyzstan, will take over Thistle’s interest in the Masbate gold project in the Philippines. The original deal provided for CGA to pay for the transaction in shares valued at an average price, with a floor of A65 per share. The amended deal fixes that value at A65.

CGA had previously received US$15 million from the Kyrgyz government and from Kyrgyzaltyn to relinquish its stake in the Taldy Bulak project, money it is investing in Masbate (T.N.M., Feb 26-Mar. 4/07).