US to intervene in Oxus Gold row

The US government was on the verge of wading into the diplomatic dispute between Oxus Gold, the AIM-listed mining company, and the Kyrgyz government yesterday, after the group served official dispute notices on the Kyrgyzstan authorities and suspended construction of its new mining facilities in the country.

In a statement to the London market yesterday morning, Oxus said it had forwarded the dispute notices to both the UK Government and Condoleezza Rice, the US Secretary of State, who it claimed was supportive of the British company due to its significant number of American investors.

Oxus said the dispute notices now open the door for the UK and US to take formal action against the Kyrgyz government if necessary.

The dispute first erupted several weeks ago when the Kyrgyz government withdrew Oxus's mining licence. Last month, Tony Blair entered the dispute, writing to the Kyrgyzstan President, Kurmanbek Bakiyev, warning that his country was not living up to its obligations under the global anti-corruption initiative.

President Bakiyev fired back an angry letter in which he insisted he did not need to be reminded of his obligations, and claimed the reason for the withdrawal of Oxus's licence was that the company was "irresponsible" and "unlawful".

It has been suggested that Oxus is the victim of an attempt by a group of Georgian businessmen, in league with the Kyrgyz authorities, to take over the mine.

Bill Trew, Oxus's chief executive, said he remained confident that the dispute would settled soon. "We have been building the Jerooy mine in good faith and with the express encouragement and full knowledge of the Kyrgyz government," he said.

After falling as much as 11 per cent in early trading, the stock eventually closed down 3.9 per cent at 56p.