Alamos Gold seeks US$1bn from Turkey linked to stalled project

Alamos Gold seeks $1bn from Turkey linked to stalled projectThe Kirazli gold project is located in a wooded region near Mount Ida – or Kaz, as it locally known home to diverse flora. (Image: Deforestation around the Kirazli mine site. Kazdağları Kardeşliği | Twitter.)

Alamos Gold (TSX: AGI; NYSE: AGI) is seeking to obtain more than US$1 billion from Turkey for what it deems as “unfair and inequitable treatment” of its Kirazli gold project, which has been halted since 2019 following protests and the expiration of the mining permit.

The Toronto-based miner and its Netherlands units, which have had an active presence in Turkey since 2010, said the claim will be filed under a Netherlands-Turkey bilateral investment treaty.

“Alamos and the subsidiaries have invested over $250 million in Turkey, unlocked over a billion dollars’ worth of project value, and contributed over $20 million in royalties, taxes and forestry fees to the Turkish government,” the company said in the statement.

The gold miner said the sought sum represented the value of all its Turkish assets.

Opposition to Kirazli, located in a forested region near Mount Ida, began building two years ago, on the back of allegations that the miner had exceeded the number of trees it was supposed to cut according to an environmental impact report.

Protests grew larger after the company’s alleged plans to use cyanide flooded Turkish social media.

Alamos, which has denied claims of cyanide leaks into the project’s surrounding area, said the Turkish government has failed to grant a routine renewal of its mining licenses in the 18 months since expiry.

The company says that during that time, it has met all legal and regulatory requirements for the renewal.

“The failure to renew the company’s mining licenses will result in the loss of over a half a billion dollars in future economic benefits to the Republic of Turkey, including tax and other revenues, and thousands of jobs within Turkey,” Alamos said.

The company noted that, as a result, it expects to incur an after-tax impairment charge of about US$215 million, which will be recorded in the second quarter financial statements.

The Kirazli gold mine was expected to produce an average of 104,000 ounces at all-in sustaining costs of US$373 per ounce over a five-year mine life.

Alamos currently has two operating mines in Canada (Young-Davidson and Island Gold in northern Ontario), and one in Mexico (Mulatos in Sonora state). It also has projects in Canada, Mexico, Turkey, and the United States.

In a research note, Ryan Hanley of Laurentian Bank  Securities, emphasized that “it is important to note that the permit has not been revoked, it has just not been renewed.”

“We believe that the process will likely result in one of three outcomes: 1) the mining licence is renewed and forestry permit reinstated; 2) a settlement will be reached with the Turkish government, or 3) the dispute moves through an arbitration process with a potentially extensive time to resolution,” he wrote. “We continue to believe that there is still the potential for AGI to retain a local partner — a process which could run in parallel to the investment treaty claim.”



Be the first to comment on "Alamos Gold seeks US$1bn from Turkey linked to stalled project"

Leave a comment

Your email address will not be published.


By continuing to browse you agree to our use of cookies. To learn more, click more information

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.