EDITOR: | May 1st, 2014 | 9 Comments

Stans Energy wins arbitration case in Moscow as Russian influence builds in Kyrgyzstan

| May 01, 2014 | 9 Comments

stansenergyStans Energy Corp. (‘Stans’, TSX-V: HRE | OTCQX: HREEF), as predicted, has won its international arbitration case in the matter between itself and the Government of the Republic of Kyrgyzstan at the Arbitration Court of the Moscow Chamber of Commerce and Industry (the “Court”) whereby the Court has ruled in favor of Stans. This means that Stans will be entitled to receive compensation from the Kyrgyz government over the damages caused by the latter’s interference in Stans’ industrial and mining activities at the Kutessay II project. Stans literally sued the government of Kirgizstan for effectively preventing it from developing the Project. In effect, there was little doubt that the international arbitrators would rule in favor of the Company and throughout the month of April, Stans saw its shares rise 57% on the OTCQX and 33.3% on the TSXV.

Stans will outline the details of the case upon receipt of the written ruling, over the next three months, which will also include the final damage amount. Stans also intends to continue talks with the Kyrgyz government during this ‘interim’ period to reach a settlement and resume operations at the Kutessay II project. Doubtless, the fact that the Inter-District Court of Bishkek ruled in favor of the Kyrgyz General Prosecutor’s Office (SPO) with respect to its claim regarding Stans’ Kutessay II Project, essentially implying the annulment of Stans’ whole license acquisition process, played an important role in influencing the arbitration Court’s decision.

The fact that the Arbitration Court that issued the ruling is Russian adds more weight to the decision because the Kyrgyz government, and particularly the President, who has an edge in the balance of power over Parliament, has taken a decidedly pro-Moscow stance, which has withstood the international pressure related to the crisis in Ukraine. Kyrgyzstan envisages its future in partnership with Russia, said President Almazbek Atambayev last September. Russia is Kyrgyzstan’s main strategic partner and recently signed a series of deep reaching bilateral agreements. One of these includes the construction and operation of new and much needed hydropower plants, including the Kambarata -1 facility atop the Naryn falls, which is to generate nearly 5 billion kWh of electricity per year and will cover the growing energy needs of the country. Earlier last month, moreover, Russian oil giant Rosneft offered a bid to purchase a majority stake in Manas, the state-controlled company that owns all of Kyrgyzstan’s civilian airports, which it intends to use to build a major international logistics hub.

On the technical side, aside from the emerging market risk, Stans’s Kutessay II project has not lost any of its appeal. Stans has taken over a project that historically operated in the USSR, producing rare earths and, which was only shut down in the wake of the collapse of the USSR. Apart from the mine, Stans was able to take over an associated processing plant, which it is preparing to resume production. The advantage to investors is that Stans can take a fast track toward achieving the right metallurgy to produce the oxides and metals. In the Soviet period, the Kashka Rare Earth Processing Plant (KRP), as it was known, was used to produce some 120 different metals, alloys, and oxides. The Kutessay-2 field 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.

The only obstacle standing between Stans moving to full operation has been the Government’s obstruction, which has now been dealt by the arbitration process. Interestingly, and almost unnoticed, at the same time that the Arbitration Court was issuing its ruling in favor of Stans Energy, another Court in  Kyrgyzstan delivered another significant sentence, which suggests that Stans may yet have a fair chance. Former Kyrgyz President Kurmanbek Bakiyev, deposed in 2010, was sentenced in absentia to 25 years in prison. He was accused of ordering an attack against a British businessman, over a disagreement with the Kyrgyz government over the management of a gold mine in 2006. The court also ordered the seizure of Bakiyev’s assets. Bakiyev took power in March 2005 after a violent revolt that ousted the then Head of State, Askar Akayev. He currently lives with his family in Belarus, which has so far resisted extradition.


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  • Tracy Weslosky

    Stans Energy Corp. TSXV: HRE up +33.33% and OTCQX: HREEF up +57.50% for April 2014

    May 1, 2014 - 12:31 PM

  • David Mortimer

    Does any one have an idea if this is going to sort out Stans woes once and for all when dealing with the Kyryg government ,because its been one step forward two steps back for them ,on paper it looks great but will it really help them to win back their license and help investor confidence in Stans and in investing safely in this country .

    May 1, 2014 - 5:51 PM

    • J. Best

      Let’s hope this translates into a clean move forward for Stans.

      May 1, 2014 - 6:37 PM

  • J. Best

    Great news for Stans!

    May 1, 2014 - 6:36 PM

  • Sunnyvale

    Closed up 70% (HREEF) on the news. Need a few more of those to break even!

    May 1, 2014 - 10:49 PM

    • David Mortimer

      Yeah lets hope they can sort out the license agreement and get mining then we could have a nice stock on our hands again .

      May 2, 2014 - 7:56 AM

  • jochen reuter

    Boris and Rodney seem to be great team. They finally did what could have been done 2 years ago. At that time they were blocked for several reasons.

    Hopefully the board will not give the CEO and/or president role to s.b. from outside.

    I feel fine if these two guys -togehter with their team -move forward by their own- without fresh/external CEO guidance

    May 2, 2014 - 10:32 AM

    • David Mortimer

      Rodney reminds me of a cuddly grand dad but he’s a tough operator and nobodies fool.

      May 2, 2014 - 8:01 PM

  • Venture capitalist

    Kyrgyzstan is a very corrupt country with the worst mining policy of all reported countries by the Fraser Institute in their latest survey. Besides this, their deposit is very radioactive and low grade and basically not much is happening, and whenever I read something on Stans, I’ll always remember Mickey’s to-the-point analysis back in 2011: http://www.goldgeologist.com/mercenary_musings/musing-110207-REE-Review-The-Anatomy-and-Dissection-of-a-Junior-An-Analysts-View.pdf

    May 12, 2014 - 5:52 AM

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