Kazakhstan Regulatory Actions


 

TIDMKZG TIDMPLZL 
 
RNS Number : 1795P 
KazakhGold Group Ltd 
12 July 2010 
 

FOR IMMEDIATE RELEASE 
 
12 July 2010 
 
KazakhGold Group Limited 
 
 
                          Kazakhstan Regulatory Actions 
 
As previously announced, KazakhGold Group Limited ("KazakhGold" or the 
"Company") and Jenington International Inc. ("Jenington"), a subsidiary of OJSC 
Polyus Gold ("Polyus Gold"), have commenced legal proceedings against five 
members of the Assaubayev family who were former directors of KazakhGold, Gold 
Lion Holdings Limited (the company holding the Assaubayev family interests) and 
Hawkinson Capital Inc., alleging, among other things, that the former director 
defendants misappropriated funds intended for capital expenditures through sham 
contracts entered into by KazakhGold's operating subsidiary.  The claimants also 
allege that the former director defendants misrepresented production and sales 
revenue in 2006-2008 and the amount of capital expenditures made by KazakhGold 
in KazakhGold's public disclosures and other disclosures relied upon by 
Jenington in making the Partial Offer.  Details of the allegations made by the 
Company and Jenington have been provided to the relevant authorities in 
Kazakhstan. 
 
Following these steps, KazakhGold's subsidiaries in Kazakhstan have now received 
a letter from the Ministry of Industry and New Technologies of the Republic of 
Kazakhstan indicating that the prior decisions of the competent authorities in 
Kazakhstan relating to the waivers of the state's pre-emptive right to acquire 
KazakhGold securities had been annulled.  The decision appears to be based on 
the waiver obtained by the former directors of KazakhGold for the partial offer 
by Jenington, which was completed in August 2009, but also covers the waiver 
subsequently obtained in June 2010 for the proposed business combination between 
Polyus Gold and KazakhGold announced on 30 June 2010 and the US$ 100 million 
equity placing completed by KazakhGold on 1 July 2010.  The letter requests 
information on the value of the share acquisition transactions from KazakhGold. 
KazakhGold intends to provide all available information requested by the 
Kazakhstan Government. 
Commenting on the regulatory actions, Evgeny Ivanov, Chairman of the Board of 
Directors and Chief Executive Officer of KazakhGold and General Director of 
Polyus Gold, said, "We note that the decision of the Kazakh authorities to 
review the actions taken by the former directors of KazakhGold follows 
commencement of the proceedings by KazakhGold against them, which we have duly 
informed the Kazakh authorities of.  We welcome the readiness of the relevant 
Kazakhstan authorities and ministries to investigate the activities of former 
management.  We believe that prompt  resolution of these matters in accordance 
with applicable laws will enhance Kazakhstan's status as an attractive country 
for foreign investment, as well as help KazakhGold achieve its goal of reaching 
an annual production of  500 thousand troy ounces of gold by 2016.  KazakhGold 
is committed to reinvesting any funds recovered by it in these proceedings in 
gold production and exploration activities in Kazakhstan.  In addition, 
KazakhGold intends to repay the Kazakh Government  (through funds provided by 
Polyus Gold, if required) for VAT that it believes had been improperly 
reimbursed in connection with the sham contacts identified by it.  These VAT 
repayments, which have previously been reflected in the Company's unaudited 
restated financial statements for the year ended 2008 contained in its audited 
2009 financial statements, are expected to amount to approximately $25 
million. The Company also intends to seek reimbursement of its damages from the 
defendants." 
Enquiries: 
 
Alexey V. Chernushkin, Director, CM and IR 
Evguenia V.Buydina, IR manager 
+44 (0) 208 528 1450 
+44 (0) 208 528 1020 
 ir@kazakhgold.com 
 
Anton A. Arens, PR Director 
+44 (0) 208 528 1450 
+44 (0) 208 528 1020 
 anton.arens@kazakhgold.com 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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