Alamos Gold Inc. (
TSX:AGI;
NYSE:AGI) (“Alamos” or, including its direct and indirect
subsidiaries, the “Company”) regrets to announce that its
Netherlands wholly-owned subsidiaries Alamos Gold Holdings
Coöperatief U.A, and Alamos Gold Holdings B.V. (the “Subsidiaries”)
will file an investment treaty claim against the Republic of Turkey
for expropriation and unfair and inequitable treatment, among other
things, with respect to their Turkish gold mining project. The
claim will be filed under the Netherlands-Turkey Bilateral
Investment Treaty (the “Treaty”), and is expected to exceed $1
billion, representing the value of the Company’s Turkish assets.
Alamos has had an active presence in Turkey since 2010. Over
that time frame, the Company’s Turkish operations have met all
legal and regulatory requirements, complied with best practices
relating to sustainable development including meeting the highest
environmental and social management standards, created hundreds of
jobs, and developed trusting relationships with the local
communities. 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. Over the life of the
project, government revenues alone are expected to total $551
million. Additionally, Alamos and the Subsidiaries have invested
$25 million to date towards various community and social
initiatives.
In October 2019, well into construction of the Kirazlı Gold Mine
(“Kirazlı”), the government failed to grant a routine renewal of
the Company’s mining licenses, despite the Company having met all
legal and regulatory requirements for their renewal. This past
October, the Turkish government refused the renewal of the
Company’s Forestry Permit. The Company had been granted approval of
all permits required to construct Kirazlı including the
Environmental Impact Assessment approval, Forestry Permit, and GSM
(Business Opening and Operation) permit, and certain key permits
for the nearby Ağı Dağı and Çamyurt Gold Mines. These permits were
granted by the Turkish government after the project earned the
support of the local communities and passed an extensive multi-year
environmental review and community consultation process.
In its effort to secure the renewal of its mining licenses, the
Company has attempted to work cooperatively with the Turkish
government, has raised with the Turkish government its obligations
under the Treaty, has sought to resolve the dispute by good faith
negotiations, and has made considerable effort to build support
among stakeholders and host communities. The Turkish government has
failed to provide the Company with a reason for the non-renewal or
a timeline for renewal of its licenses.
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. In addition to the
lost job opportunities, this will also have a lasting impact on the
local population through the disruption of ongoing investments into
community projects.
“Alamos began investing in Turkey in 2010, warmly welcomed by
the Turkish government through its foreign investment office. After
10 years of effort and over $250 million invested by the Company we
have been shut down for over 18 months in a manner without
precedent in Turkey, despite having received all the permits
required to build and operate a mine. The Company has worked in
Turkey to the highest standard of conduct with respect to social
and environmental best practices. Despite this effort, the Turkish
government has given us no indication that relief is in sight, nor
will they engage with us in an effort to renew the outstanding
licenses. We are hopeful that the arbitration process will bring
about the engagement that we have sought from the Turkish state,
and lead to an equitable resolution to this impasse,” said John A.
McCluskey, President and Chief Executive Officer of Alamos
Gold.
Alamos and the Subsidiaries are being represented by the leading
Canadian law firm Torys LLP, with a team that includes John Terry
and former Canadian Supreme Court Justice, the Hon. Frank
Iacobucci. The Company is also being supported by its strategic
advisor John Baird, former Canadian Minister of Foreign Affairs and
Senior Advisor to Bennett Jones LLP.
Bilateral investment treaties are agreements between countries
to assist with the protection of investments. The Treaty
establishes legal protections for investment between Turkey and the
Netherlands. The Subsidiaries directly own and control the
Company’s Turkish assets. The Subsidiaries invoking their rights
pursuant to the Treaty does not mean that they relinquish their
rights to the Turkish project, or otherwise cease the Turkish
operations. The Company will continue to work towards a
constructive resolution with the Republic of Turkey. If required,
Alamos and the Subsidiaries are confident in the Subsidiaries’
ability to recover and enforce any favourable judgement pursuant to
this Treaty, which will be rendered by three independent
international arbitrators. Although timelines with respect to
bilateral investment treaty arbitration can vary depending on
procedural steps and delay tactics employed by nation states, it is
estimated to have finality within five years. A portion of the cost
of such an arbitral process is expected to be recovered as part of
the arbitration process.
The failure by the Republic of Turkey to renew the mining
licenses in the 18 months since their expiry, the failure of
discussions with the Republic of Turkey to date to resolve the
situation, and the resulting current decision to proceed with a
bilateral investment treaty claim is an impairment trigger for
accounting purposes. As a result, Alamos and the Subsidiaries
expect to incur an after-tax impairment charge of approximately
$215 million, which will be recorded in the second quarter
financial statements. The non-cash charge reflects Alamos’ and the
Subsidiaries’ entire net carrying value of the Turkish assets.
About Alamos
Alamos is a Canadian-based intermediate gold producer with
diversified production from three operating mines in North America.
This includes the Young-Davidson and Island Gold mines in northern
Ontario, Canada and the Mulatos mine in Sonora State, Mexico.
Additionally, the Company has a significant portfolio of
development stage projects in Canada, Mexico, Turkey, and the
United States. Alamos employs more than 1,700 people and is
committed to the highest standards of sustainable development. The
Company’s shares are traded on the TSX and NYSE under the symbol
“AGI”.
Investor Contact
Scott K. ParsonsVice President, Investor Relations |
|
(416) 368-9932 x
5439ir@alamosgold.com |
|
Media Contact
Rebecca ThompsonVice President, Public Affairs |
|
(416) 368-9932 x
5448media@alamosgold.com |
|
All amounts are in United States dollars, unless
otherwise stated.
The TSX and NYSE have not reviewed and do not accept
responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward Looking
Statements
This News Release contains statements about expected or
anticipated future events, financial results and litigation
outcomes that are forward-looking in nature and, as a result, are
subject to certain risk and uncertainties such as the inherently
uncertain nature of potential and ongoing litigation proceedings
including outcomes and costs, general economic, political, market
and business conditions, regulatory processes and actions, new
legislation, government actions or inactions, technical issues,
potential delays or changes in plans, the occurrence of unexpected
events and the Company’s capability to execute and implement its
future plans.
The Republic of Turkey has recently experienced significant
political, social, legal and regulatory instability. The impact of
the change in political climate in Turkey in recent years is not
fully known, but may include heightened control of the judiciary,
bureaucracy, media and the private business sector. While the
Company is taking the actions described in this News Release to
mitigate the effects of the actions of the Turkish government in
respect of the Company’s assets and gold mining projects in the
Republic of Turkey, there can be no assurance that such mitigating
actions will be effective or successful. If unsuccessful, the
Company’s assets and gold mining projects in Turkey may be subject
to resource nationalism and further expropriation; the Company may
lose the full value of its assets and gold mining projects in
Turkey and its ability to operate in Turkey. Even if successful,
there is no certainty as to the quantum of any damages award,
recovery of all, or any, legal costs. Any resumption of activities
in Turkey, including renewal of the requisite operating licenses or
permits, or even retaining control of its assets and gold mining
projects in Turkey can only result from agreement with the Turkish
government. The litigation described in this News Release may have
an impact on foreign direct investment in the Republic of Turkey
which may result in changes to the Turkish economy, including but
not limited to high rates of inflation and fluctuation of the
Turkish Lira which may also affect the Company’s relationship with
the Turkish government, the Company’s ability to effectively
operate in Turkey, and which may have a negative effect on overall
anticipated project values.
Additional risk factors affecting Alamos and the Company’s
ability to achieve expectations set forth in the forward-looking
statements contained in this News Release and in general are set
out in the Company’s latest 40F/Annual Information Form and
Management’s Discussion and Analysis, each under the heading “Risk
Factors” available on SEDAR (www.sedar.com) or on EDGAR
(www.sec.gov). The Company disclaims any intention or obligation to
update or revise any forward-looking statements whether as a result
of new information, future events or otherwise, except as required
by applicable law.
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