A settlement has been reached in the 18-month-long dispute between
The settlement calls for Arkhangelskgeoldobycha (AGD) to turn over title to the 400-sq. km property, situated near the coast of the White Sea, to a newly formed joint stock company called Almazny Bereg II.
AGD had refused to transfer the title early in 1998, prompting Archangel to discontinue exploration payments and resort to international arbitration to pursue its claim. The company also appealed to the Russian and Canadian governments, as well as the Canadian ambassador to Russia.
The lasting effects of the collapse of the Russian ruble in 1997 hastened AGD’s return to the bargaining table, says Archangel President Timothy Haddon, who adds: “The agreement could not have been completed without the help of AGD’s main shareholder, Alister Usmanov.”
In accordance with Russian law, which requires that Russians maintain control of diamond assets, AGD will retain a half-interest in Almazny Bereg II; Archangel will own a 40% interest, with the remainder held by privately owned International Business Management Enterprises (IBME).
The agreement allows Archangel to resume exploration at Verkhotina, where previous work outlined the 14-ha Grib kimberlite pipe. Task Holdings, a subsidiary of
Recently, the partners drilled 20 angled core holes and 12 vertical holes. Archangel has been accruing its share of exploration costs, totalling US$2 million, and intends to reimburse the funds after a careful review of the work.
Archangel plans to complete a bulk sample before April 2000. The work will entail drilling as many as 12 wide-diameter holes to recover 1,000 carats. To date, Archangel and its partners have collected more than 465 carats. Plans also call for the construction of a 10-tonne-per-hour processing plant and an access road from Pomorye.
In April, Task must decide whether to exercise warrants in Archangel that would net the former more than US$14 million, enough to carry it through to a feasibility study. The warrants were originally to expire in April 1998; however, Archangel extended the date by one year because of the title dispute. By exercising the warrants, Task would increase its ownership in Archangel to 50% of the outstanding shares, up from 41%.
The boards of both Archangel and AGD have approved the agreement. As a result, Archangel will suspend arbitration proceedings. Regulatory approval is pending.
Be the first to comment on "DIAMOND PAGE — Archangel, Russian partners end dispute"