Summary
- Stans Energy is moving closer to seizing Centerra Gold's shares.
- Disruption of Centerra Gold's efforts to solve its own problems with the Kyrgyz government is becoming more probable.
- The scenario anticipated in our recent article seems to be playing out.
Stans Energy (OTCQX:HREEF) issued an update on various corporate matters, including the progress in its legal proceedings against the Kyrgyz Republic with regards to its expropriation of a rare earth project. The company is targetingthe country's shareholding in Centerra Gold (OTCPK:CAGDF) as compensation which has been awarded by the Moscow Chamber of Commerce and Industry. To this end, Stans Energy maintains the arrest of 47M Centerra Gold shares which are listed on the Toronto Stock Exchange. Documents will be filed at the Ontario Court of Justice in the near future to start the hearings for seizure of arrested assets of the Kyrgyz Republic at the Ontario Court of Justice.
Centerra Gold, on the other hand, is also troubled by threats of nationalizationof its interest in the Kumtor Gold mine in Kyrgyzstan. A solution currently proposed by Centerra Gold hinges on the exchange of the company's 32.7% equity stake owned by the Kyrgyz government for a 50% stake at the Kumtor project level. The described injunction prohibits this proposed transaction, andforeshadows further escalation in the troubled relationship between Centerra Gold and the Kyrgyz government.
The scenario anticipated in our recent PRO article on Centerra Gold seems to be playing out, and we are keeping well away from an investment in Centerra Gold.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
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