September 7, 2011, Ulaanbaatar (Envidity) – Despite significant progress over the past year, the finalization of USD 1 billion Shivee Ovoo Coal Gasification and Gas to Liquids
("UCG/GTL") project that is expected to create approximately 3,000
construction and 150 permanent higher salaried jobs, reduce fuel
dependency and prices, introduce patented technology, and raise millions
of dollars in royalty and tax revenue for Mongolia has stalled. "We
call upon our Mongolian partners and the Mongolian Government to honor
their commitments and representations to move this project forward" said Envidity's Chairman, retired General Wesley Clark.
"The license holder Live Energy Group LLC/Shine Shivee LLC has so far been acting in a bizarre manner toward
the execution of a definitive agreement to carry the project forward
since it was presented for execution over six weeks ago" said Envidity
CEO Jeff Brookman. According to a legally-binding agreement
entered into by Live Energy Group's Executive Director last year, Live
Energy Group and its subsidiary company Shine Shivee LLC, license holder
in the Shivee Ovoo field, were obligated to sign a definitive
agreement enabling initiation of the seismic and drilling on the
property. Although Envidity has fully met its commitments regarding
funding, technology and timing, the Executive Director of Live Energy
Group LLC/Shine Shivee LLC and a group of Chinese and Malay
speculators have refused to execute the definitive agreement that has
been agreed, effectively blocking the Envidity Project from launch.
"One
of the key reasons that we chose Mongolia to carry out the project
despite significant offers elsewhere was the specific request of Prime Minister Batbold
to bring cutting edge value adding technology to Mongolia" said General
Clark. Envidity's project was specifically encouraged because of its
potential to profoundly impact the Mongolian people by offering an
abundance of low cost, ultra clean, Mongolian made liquid fuels and
electricity produced through green patented western technology; not to
mention the potential for jobs and billions of dollars to be generated
into the Mongolian economy through the production of chemical
feedstocks.
"One would expect the Government, who helped induce this Project, to act decisively and protect this strategic Project's
licenses from potentially illegal and short sighted acts that appear
to be becoming endemic in Mongolia and have occurred on the eve of the
Project's launch," continued General Clark. "If the Mongolian
Government fails to address these actions by license holders seeking to
block the Envidity Project's many positive benefits to Mongolia, it
will send a clear message that sophisticated international mining
investors must think very carefully before investing the substantial
time, financing and other resources to develop a project in the
Mongolian mineral sector. I call on Prime Minister Batbold to intervene
to protect the integrity of the Project and the exploration licenses
held by Live Energy Group LLC and Shine Shivee LLC to allow this
critically important Project to move forward. Firm action by the
Government is needed to protect investor confidence in Mongolia," said
Clark.
According
to CEO, Jeff Brookman, "what's being discovered so far is that the
Executive Director and other Mongolian shareholders of Shine Shivee
LLC have apparently profited from the sale of some of their ownership
stake in Shine Shivee LLC to Chinese and Malaysian speculators who
may not have been fully informed of the legal commitment to Envidity.
Post sale, the Mongolian Executive Director appears to be working with
the Chinese and Malaysian speculators to maximize their interests at the
expense of UCG development for the Mongolian people." Mr. Brookman
explained that despite multiple promises to execute the definitive
agreement over the summer, Live Energy Group LLC and Shine Shivee LLC's
Executive Director has thus far failed to do so, in clear violation of
his company's legal obligations.
"We
are certainly hoping that this is not a bait-and-switch by the
Government and the local partner" interjected Mr. Brookman. "Like
other investors, we have always taken the Mongolian Government at their
word at investment conferences, trade shows and in meetings designed to
encourage business in Mongolia. They have assured all of us that
Mongolia is open and ready for business." Minister Zorigt has been
presented with a draft agreement to reconfirm the Government's
commitment toward the Project and his response is expected this month.
"I
regret that our UCG/GTL project has been delayed despite a year's work
with the Mongolian government agencies, investors, fuel offtake buyers,
and all other necessary preparations for project launch. Repeated promises by our Mongolian partners to fulfill their legal obligations have not been kept" said retired General Wesley Clark, Chairman of Envidity. "Everybody could still win with this project – especially the Mongolian people, but the opportunity is slipping away,"
Clark said, "and could become a classic example to foreign investors
of how difficult it is to launch projects so beneficial to Mongolia. The
real losers will be the people of Mongolia, who would have to forgo
quick access to virtually unlimited supplies of clean, lower cost fuel
and continue their overwhelming dependence on their neighbors who like
to decide what Mongolia can and cannot do." This comes at a crucial
time when Russia has recently increased its export tax.
"We
have previously asked the Government of Mongolia to expedite the UCG
Investment Agreement (fiscal stabilization agreement) for this project
and take this opportunity to renew that request. We believe that Government leadership on this agreement is more important than ever"
said Envidity CEO, Jeff Brookman. The Envidity UCG/GTL project is a
good example of an important strategic development, which could benefit
from greater transparency that was discussed recently in high-level
talks between the governments of Canada, the United States and Mongolia.
Investors at the Discover Mongolia conference in Ulaanbaatar and Mongolia Investment Summits
in Hong Kong, London, New York and Toronto need to be cognizant of the
fact that one can have a binding agreement, secure the funds, dedicate
substantial time, receive substantial encouragement from the Government
and then the project becomes stalled because of insider manipulation of
exploration license rights in clear breach of existing agreements.
Envidity has secured $120m of cash and access to an additional $850m in debt
for a total of $1B in foreign direct investment into Mongolia over five
years. With timely action by Envidity's Mongolian partners and the
Mongolian Government, Envidity's UCG/GTL Project can still go forward.
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For more information regarding the Envidity project please see www.envidity.com
Link to Envidity release
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