Companies: OXS   

A $6.2 million (£4.1 million) provision for the annulment of Oxus Mining's Jerooy gold-mining licence in the Asian republic of Kyrgystan sent losses at the Aim-listed play soaring from $1.2 million to $7.2 million (£4.7 million) in the six months to June, writes Robert Tyerman.

Oxus, which lost $1.5 million for the whole of 2001, says it is disputing the Kyrgystan government's decision to dissolve its joint venture at Jerooy. But it has nevertheless decided to make a provision of $6.2 million for its entire investment. Jerooy is reckoned to need a $300-an-oz gold price to be economic – against today's $310 market price. And Oxus has been seeking tax-breaks to facilitate its development.

The Kyrgystan government complained that Oxus had not done a proper feasibility study on the project. But the company said it had completed one 18 months previously. As a result of the dispute, the company's licence has been annulled.

Elsewhere, Oxus has put together the financing needed to proceed with its Amantaytau gold project in Uzbekistan. Société Generale recently agreed to provide a £15.3 million loan to enable it to pay its share of the £27.5 million estimated cost of bringing Amantaytau into production.

Soc Gen leads a syndicate of banks that is advancing £20.6 million to Amantaytau Goldfields – Oxus' 50 per cent-owned subsidiary – to fund the development of Amantaytau. Oxus boss Roger Turner claims Amantaytau could have a gold resource of 6 million oz on the basis of recent drilling – or even as much as 15 million oz on estimates made during the Soviet era.

Oxus must pay £1.7 million upfront to cover three years' pre-paid interest on the Soc Gen loan and associated insurance premiums. Turner hopes full production will start in 12 months – at an annual rate of 175,000 oz – with estimated costs below $110 an oz.

Not so long ago Oxus raised £8 million at 30p a share. Since then its price has plunged to 6p, but it has now rallied modestly to 11.25p.