Oxus Gold (LON:OXS) shares soared by as much as 50 per cent today as it agreed litigation funding arrangements for its US$400 million legal battle with the Uzbekistan government.
It has agreed the deal with Calunius Capital, a specialist investment company that funds commercial litigation and arbitration claims.
Calunius will pay the costs related to its international arbitration proceedings against the Uzbek government. This arrangement is on a non-recourse basis - which essentially means it is a ‘no win, no fee’ deal.
Oxus says it will still retain complete control over the arbitration proceedings, insofar as the proceedings relate to the company's claims.
The group will also have the right to settle with the Uzbeks, discontinue proceedings, proceed to trial or take any action it considers appropriate to enforce judgement, it added.
Calunius will receive a material portion of any settlement of the arbitration claim, Oxus explained.
The actual amount paid to Calunius will depend on the value of the settlement and how long it takes to settle the claim. Oxus says Calunius’ payment will not exceed the amount of the aggregate proceeds of the litigation under any circumstances.
At 12:30, Oxus shares were up 0.52p, or 35 per cent, trading at 2p each.
Last year Oxus agreed to sell its 50 per cent stake in the Amantaytau Goldfields (AGF) mining operation in Uzbekistan.
The deal was with two state backed mining companies, which already owned the other 50 per cent stake in the AGF venture.
The transaction value was not agreed at that time. And subsequently the state-backed buyers initiated an audit to determine a value for the deal.
However Oxus later declared ‘force majeure’ over the assets.
Oxus says the audit was not evaluating the assets of AGF in good faith and instead it appeared to be using the process to find reasons to justify putting AGF into liquidation.
The company made attempts to negotiate an amicable resolution to the dispute but, Oxus says, the government did not make itself available to discuss the issue.
As a result Oxus revealed that the attempted negotiations had failed and it began international arbitration proceedings in August.
The arbitration requests that damages be proven and quantified through the proceedings. At that time Oxus estimated the figure would be in the order of US$400 million.