On March 4, Robert Mackay, President and CEO of Stans Energy Corp. (TSX-V: HRE, OTCQX: HREEF), announced that Jogorku Kenesh of the Kyrgyz Republic’s legal representative formally withdrew an appeal brought forth by a committee in the Jogorku Kenesh (the “Committee”) against the Company in the Inter-District Court of Bishkek, closing all legal issues surrounding Stans’ licence to operate at Kutessay II. The withdrawal of the appeal supports an original verdict issued in Stans’s favors in Kyrgyzstan dated November 15, 2012. On that occasion the Kyrgyz courts had validated Stans’ rights to the Kutessay II deposit in contrast to previous Committee rulings demanding a termination of Stan’s Licence Agreement, further recommending that the State Geological Agency withdraw the Licence Agreement itself. The March 4th announcement effectively means that all legal proceedings preventing Stans from continuing to develop its project are concluded – in Stans’ favor. Stans Energy is now free to continue its plans leading up to production at Kutessay II.
The legal wrangling suggests that the political bickering behind the license issue is also over. The political climate, as demonstrated by the license suspension issue, has shown that political feuding is certainly a big issue in Kyrgyzstan and Central Asia even though recent events have shown that the political situation in Bishkek is turning in the miners’ favor. Stans had its mining license temporarily suspended last September due to political infighting. However, by November, some optimism could be sensed as Stans produced the preliminary results from the first nine holes and published assays for all 11 holes.
Kyrgyzstan is one of the diplomatic chessboards where the confrontation between Russian, US and Chinese interests will be most intense. Nevertheless, Kyrgyzstan, unlike its neighbors, has been a parliamentary republic with a strong prime ministerial role since 2010. The Kutessay license issue was related to political opportunism as some leaders have tried to use foreign companies as scapegoats to gain stature and influence even as they drive away necessary investment. The new government, which came into power toward the end of September, has shown that it is serious about improving the business conditions for mining companies and challenging the actions of nationalist groups harassing foreign mining companies.
Last October 3, in an effort to reassure foreign mining companies, the government arrested the main perpetrators of these threats, including an MP. Prime minister, Zhantoro Satybaldiyev, has categorically ruled out the nationalization of any foreign mining assets, when confronting the ‘nationalists’, stressing that the government values mining and extraction to be core economic sectors that cannot be compromised. The government has also announced that it would vastly increase the number of mining and geological experts working at the State Agency for Geology and Mineral Resources, which is oversees licensing procedures and management. The current government has been very serious about improving the investment climate and reducing political risks for such companies as Stans Energy and the other miners operating in Kyrgyzstan.
Stans acquired a 20-year license for the development of the Kutessay-2 field in 2009, at the price $860.000. Two years later the company completed the purchase of the local Kashkinsky plant of rare earth elements, which specialized in the processing of rare earth elements from the Kutessay-2 field during Soviet times. The Kutessay-2 field, which is located in the Keminsky district of the Chui region, during Soviet times, delivered up to 80% of the USSR’s rare earth supply. Kutessay-2 contains up to 15 rare-earth elements, as well as lead, zinc, silver, bismuth, molybdenum, thorium, tin, and copper. In addition, it contains niobium, tantalum and hafnium.