Insurance delay hits Oxus project

South African contractor Maed has emerged with a 20 per cent-plus shareholding in Oxus Mining – at the very moment when Oxus' plan to develop the 3 million-plus oz Amantaytau gold field in Uzbekistan has been thrown into the melting pot by its failure to obtain an insurance guarantee for a crucial project loan. Robert Tyerman reports.

Aim-listed Oxus is taking legal advice after reaching the conclusion that insurance broker Templeton will be unable to arrange a guarantee, from AA-rated German insurer Hermes, for repayment of a $23 million (£17 million) subordinated loan, to Oxus, from the Société Generale banking group. The loan was to enable Oxus to fund its share of the Amantaytau project – a joint venture with local groups – for which a Soc Gen-led banking syndicate had agreed to lend Oxus' half-owned operating subsidiary, Amantaytau Goldfields, nearly £20 million.

Oxus, headed by chief executive Roger Turner and advised by merchant bank Brown Shipley, maintains that Templeton had guaranteed that Hermes would provide the cover and allowed its own name (Templeton) to be included in the loan prospectus. While Turner and his advisers consider their legal and other options, they are also considering new ways of funding Amantaytau.

'We are looking for a like-for-like insurance replacement,' says Oxus spokesman Sacha Borthwick. But, if that is not forthcoming, he says Oxus will look at alternatives such as scaling down the project with contract mining or lease purchase, or seeking a 'strategic partner'.

The move by South African mining contractor Maed to buy the 19 per cent of Oxus hitherto held by US mining giant Newmont, plus some more, for an undisclosed sum opens up other possibilities, as yet unexplored. Since raising what is now realised as an inadequate £8 million last year at 30p, Oxus has seen its shares plunge to 4.5p, where an opportunistic bid could be a possibility – if Amantaytau is thought to be worth it.