Canadian court to hear Stans Energy appeal over Kyrgyz Republic’s unpaid $118M
Canadian-based rare earths junior Stans Energy (TSX-V: HRE), (OTCQX: HREEF) said the Ontario Superior Court of Justice has set the date to hear the company’s appeal to a Moscow decision that prevents it from getting a $118 million compensation granted last year.
The Toronto-based company had acquired a 20-year mining license for the past-producing Kutessay II open pit rare earth mine in Kyrgyzstan in 2009, right before prices for the coveted elements began soaring.
Shortly after, Stans Energy drew interest form outsiders and, in May 2011, the firm completed the purchase of the Kashka Rare Earth Processing Plant (KRP), the same plant that previously refined REEs from Kutessay II ores.
But it call came crumbling down three years ago, when a Kyrgyz parliamentary committee revoked the company’s licence for Kutessay, claiming the acquisition process was tainted.
Stans was able to prove its innocence and won the arbitration case last year. The victory, however, was short-lived as the Moscow court decided to hold off the millions the firm was expecting.
Appeal in Canada
The battle then moved to Canada, as the Kyrgyz Republic owns a stake in fellow miner Centerra Gold (TSX: CG) and those shares can easily be seized if the country refuses to pay Stans Energy. So far, the junior miner is winning: in October last year a court ordered the freeze of 47 million Centerra shares.
Now Stands says it continues to seek recognition and enforcement of the award before the Ontario Superior Court of Justice and will ask for a delay of the hearing later this month, due to the addition of new legal representation from Torys LLP to the case file.
The Kyrgyz Republic’s economy is highly dependent on gold and other precious metals and stones exports, which account for about 34% of the country's shipments.