Star Mining chief in talks to save stake in Russian gold

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Rudolph Agnew has been holding urgent talks in Russia in his capacity as chairman of Star Mining, an Australia-based company, to save the business's stake in Russia's biggest ever gold deposit.

Mr Agnew, chairman of Lasmo, separately became chairman of Star Mining on 1 September 1995, when he succeeded the retiring chairman, Neville Wran.

Star Mining owns 34.9 per cent of Sukhoi Log, a gold deposit near lake Baikal in Siberia which has resources of over 30 million troy ounces. Star was hoping to manage the $1bn (pounds 600m) development of Sukhoi Log, but has hit legal problems in Russia.

Local courts ruled this month that the old Soviet co-operative Lenzoloto (Lena Gold), which originally worked Sukhoi Log, was incorrectly privatised in 1992. The Supreme Arbitration Court ruled that employees should have been offered shares in the mine, a normal part of the Russian privatisation process.

The ruling's implications are unclear, but resulted in the suspension of Star's shares in Sydney earlier this month.

"Its a hell of a mess," said one mining analyst in the City yesterday. "This one has been brewing for years. Its a question of whether Western capital can get into Russia and out again or not."

Mercury Asset Management and other London institutions have stakes in Star via their mining funds. Star is receiving help from JCI, a big South African mining group, to co-develop the Sukhoi Log site.

The legal setback also casts a shadow over other privatisations in the former Soviet Union where Western enterprises have bought in. Many such privatisations may now face court challenges by former workers, according to Russian sources.