Armenian Government Imposes $50 Mln Penalty On Agrc
Published by MAC on 2007-05-04Source: Emil Lazarian
ARMENIAN GOVERNMENT IMPOSES $50 MLN PENALTY ON AGRC
Arminfo Agency
4th May 2007
Having inspected the activity of the Ararat Gold Recovery Company AGRC) owned by the Vedanta Resources corporation (India) *, the Armenian Ministry of Finances and Economy has drawn up an act worth about $50 mln, a copy of the document sent to ArmInfo says.
In accordance with the act, the largest penalty worth about $30 mln was imposed on the company as a result of inspection held in 2004-2005-2006 and in the first quarter of 2007. It turned out that the AGRC has been implementing its gold recovery activity without the required documents.
Particularly, the company turned out to lack a licence agreement, a document on reaffirmed reserves, as well as a project on developing the Sotk gold deposit. Besides, to deliberately conceal the profit earned during 1999-2006 by means of overrating the amortization of tangible and intangible assets, the company increased the production costs by about $20 mln. In this connection, about $4,5 mln penalty has been imposed on the enterprise. Smaller penalties have also been imposed on the company for a number of other financial violations disclosed by the inspectors.
To note, the Armenian Government which is discontent with the AGRC activity forces the company to leave Armenia. The well-informedsource told ArmInfo that the AGRC may be sold to a Russian company for$80-90 mln. This issue is currently being discussed in London. Four Russian investors are claiming to the company. The Vedanta Resources corporation, the owner of AGRC, is controlled by the family of Anil Agarwal, a large Indian entrepreneur. The AGRC has suspended gold mining in Armenia because of the serious reprimands of the Armenian Government which considers the investor to fail implementing its obligations. The leadership of the company denies all the complaints of the Government and considers them unsubstantiated.
Most part of the AGRC Indian personnel have already left Armenia.
According to the latest explorations, the gold reserves in the Sotkdeposit exploited by the AGRC made up 80 tons (2,6 mln ounces), in Meghradzor - less than 1 ton. The ARGC was going to increase the ore output to 4 tons per year (130 thsd ounces) by the end of 2008.
Submitted by Emil Lazarian
[*Editorial note: Vedanta Resources plc is registered on the London Stock Exchange and is to all intents and purposes a UK company]