Kyrgyzstan starts sale of disputed gold deposit

Fri Apr 5, 2013 3:43am EDT
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* Kyrgyzstan to sell Jerooy despite investor's claims

* Accepting bids until May 10

By Olga Dzyubenko

BISHKEK, April 5 (Reuters) - Kyrgyzstan has begun the sale of Jerooy, its second-largest gold deposit, turning a deaf ear to a $400 million arbitration claim filed by a Kazakh investor alleging its licence to develop the field was expropriated illegally.

The government set a starting price of $300 million for the rights of subsoil use at Jerooy and the state geology agency will accept bids until 1700 local time on May 10, said a tender announcement published in official newspapers.

Jerooy, discovered in Soviet times, lies about 3,000 metres above sea level in the northern Talas region. It has drawn several investors since the collapse of the Soviet Union in 1991 but has not been developed.

Kyrgyz Prime Minister Zhantoro Satybaldiyev told Reuters in a recent interview that Jerooy was estimated to hold up to 100 tonnes of gold. Data from state gold company Kyrgyzaltyn show that Jerooy holds almost 84 tonnes of gold and about 13 tonnes of silver.

Kyrgyzstan, a Central Asian nation of 5.5 million which borders China and hosts both U.S. and Russian military air bases, has seen two presidents toppled by violent revolts since 2005 and investors have largely bypassed its reserves of gold, copper, mercury, rare earth metals and coal.

Satybaldiyev, who headed a coalition government last September on pledges to alleviate widespread poverty, said he expects Jerooy's sale to spur investor interest in the resource-rich but politically wobbly nation.   Continued...