About Toukhmanuk gold mine or Decree No. 234 being null and void

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The Ministry of Energy and Natural Resources of the RA is Confessing

The Ministry agrees to declare that the “approved reserves” resulted by the supplementary exploration of Mego-Gold’s Toukhmanuk gold mine in 2006-2008 have not been registered in the balance sheet as a result of which has not been formed new right on Mineral Resource Management.

The web is untangling or about the Decree No. 234 to be null and void

Through the letter addressed to the Ministry of Energy and Natural Resources of the RA 23.09.2013, we wanted to get a clarification regarding the fact already discussed many times refer to the contradiction in the clauses1 and 4 of the Decree No. 234, dated in 30.10.2009 of the Agency for Mineral Resources of the Ministry of Energy and Natural Resources of the RA on the revaluation of Toukhmanuk gold mine reserves in the Aragatsotn Province by the “Mego-Gold” LLC in 2006-2008.

Because according to the clause 1 of that decision the Agency for Mineral Resources made ​​decision:

to approve the reserves of the Central Area of Toukhmanuk gold mine of Aragatsotn Province as of 01.01.2009, in accordance with the Annex 1 to this decision as well as with the data of following table:
According to the 4th clause of the decision:

4. to offer the “Republican State Geological Fund” SNCO to refrain from making amendments in the republican balance sheet of the mineral deposits arising from the clause 1 of the decision until the implementation of the works mentioned in the previous clause.

The issue was worded as follows:

a. if the above mentioned approved reserves have been registered in the republican balance sheet of mineral reserves by the “Republican State Geological Fund” SNCO or not.

The response is the following:

In response to your above mentioned letter, the reserves of Toukhmanuk gold mine in Aragatsotn Province approved by the Decree No. 234, 30.10.2009 have not been registered in the balance sheet of the mineral deposits, in accordance with the demand of the 4th clause of the same decision.

Here we consider necessary to present some of the requirements set by the RA Code on mineral recourses:

Article 63

State registration of geological exploration works, mineral resources reserves, mines, developments

1. Geological exploration works are subject to state registration.

2. It is prohibited to implement geological exploration works without public record.

3. Mineral resources reserves, mines and mineral resources developments are subject to the state registration of the balance sheet, as well as in the form of mineral deposits and developments inventory.

4. On the basis of public records data on mineral resources reserves, mines, developments and geological studies is shaped the fund of mineral resource management.

5. Expert opinion on mineral resources reserves is a basis for registration in the balance sheet

7. As a result of re-establishment mineral resources reserves relevant amendments are made in the state registration

In its response the ministry actually confirms that the requirements of the paragraphs 1 and 2 of Article 63 of the reserves state registration are overlooked by the competent authority, if the reserves were really approved in accordance with the paragraph 1 of the decision.

Or in contrary to the logic and the requirement of the laws the competent authority had approved incomplete explored reserves under the paragraph 1 of decision No. 234, so the Agency for Mineral Resources of the Ministry of Energy and Natural Resources of the RA has committed violation of the law protecting interests of Mego-Gold.

The logic requires making any conclusion based on the legal requirement, therefore, if in 2006-2008 the mine reserves based on the supplementary exploration results were not registered by Mego-Gold, then, proceeding from the above-mentioned paragraphs 1 and 7 of the Article 63, we can conclude that these resources cannot be called approved or reestablished, since relevant amendments were not made in the balance sheet.

“Confirmed” or “unconfirmed” concepts as separate concepts are not included in the Code. In the RA Code on Mineral Resources are commented the concepts “Resources” and “Accounting”.

It is worthy to speak about not registering the resources under the paragraph 4 of the decision N 234 which makes meaningless or null and void the paragraph 1 of the same decision.

Let’s take a few concepts that are commented in the code.

In accordance with the RA Code on Mineral Resources:

Article 3: the main concepts used in the Code:

11) Useful mineral resources- accumulation of useful minerals which volume, quantity, quality, and the position and shape are determined.

12) Mine – a part of the underground, which contains useful mineral which have got geological- economical evaluation.

15) Balance of Mineral Reserves – form of state registration of found mineral resources for each year as of January 1, which contains data on researched mines resources quantity, quality and degree of it exploration, as well as the change during the reporting period

The next question of our letter:

b. Whether the company has carried out the works mentioned in the paragraph 3 of the decision No. 234 or not.

Let us remind that the 3rd paragraph of the decision N 234 is the following; to underline the fact of incomplete exploration of the Central Area of Toukhmanuk gold mine of Aragatsotn Province and the strict necessity to solve the problems mentioned in the paragraph 2.1 of this Decision during the second phase of its supplementary exploration.

The answer is as follows: “The economic entity has not presented report on the activities planned by the paragraph 3 of the decision of Agency for Mineral Resources of the Ministry of Energy and Natural Resources of the RA as a result of which has not formed new rights on Mineral Resource Management.

The only “valuable” information in the response letter is that the ministry, however, reported that defective works have not been continued, and therefore have not formed new rights on Mineral Resource Management. This honest part of the answer we qualify as an acquisition, this is a news, perhaps unwittingly confession, because at the all response letters distracting from the issues the Ministry tried to disguise through the decision N 234 the fact of operating Mego-Gold illegally without a project and by open cast method and allegedly after revaluation and reestablishment of reserves the geological-economical new conditions predicted the effectiveness of the mine development by the open cast method.

It remains to ask the ministry if a new mineral right has not been formed then in this case how had been confirmed only open pit ore mining in accordance with the mining license agreement No. 287 dated 31.07.2006, and land allocation act 086 for underground mining, and on what legal basis in 12.28.2012 have been reformulated the mineral rights act already suspended by the licensing agreement in 01.11.2008, on what ground mentioned only open pit mine and land allocation established until 2017, when, according to the Ministry’s response letter addressed to us was mentioned that “Until today, the economic entity is implementing exploration activity in accordance with the PV -184 contract, which is valid until January 31, 2015.”

Maybe it is the same kind of misprint as the exploration license granted to Mego-Gold in 02.07.2013, issued for 4 years, instead of 3 years determined by the law. Somebody is prolonging the terms of the Mego-Gold documents by misprints; it is worthy to find out who is that unfortunate benefactor.

Besides making controversial analysis refer to the decision No. 234 we should clarify why the Ministry of Energy and Natural Resources of the RA closes eyes in favor of Mego – Gold which does not fulfill the duties required by law and is carrying out illegal mining.

18.10.2013

Greta Gaboyan