China Daye Non-Ferrous Metals Mining (00661) said
its 51%-owned subsidiary China Reservoir Mining Limited (CRML) received the written
arbitral award issued by the Mongolian National Arbitration Center at the Mongolian
National Chamber of Commerce and Industry in relation to the proceedings pursuant to which
the Mongolian Arbitration Center ruled that the mining right to the Aleinuer Mine has to
be returned by Reservoir Moly to Nomin Deposit LLC (the Mongolian JV partner).
CRML holds a 55% equity interest in Reservoir Moly. The remaining 45% equity interest in
Reservoir Moly is held by the Mongolian JV partner. Reservoir Moly holds the mining right
to the molybdenum mine located in the Sukhbaatar Province, Mongolia.
At the time of the establishment of Reservoir Moly in December 2005, the Mongolian JV
partner transferred the mining right to the Aleinuer Mine to Reservoir Moly as part of its
capital contribution, while CRML undertook to meet its capital contribution by financing
the further development of Aleinuer Mine. Reservoir Moly has since completed exploration
works at the Aleinuer Mine.
According to the advice of CRML's Mongolian legal advisers, in order to enforce the
arbitral award, the Mongolian JV partner is required to submit such award to the
enforcement authority which in turn will request the relevant mining authority to amend
the mining licence to the Aleinuer Mine, and before the mining licence to the Aleinuer
Mine is so amended, the mining right remains with Reservoir Moly.
In addition, CRML has the right to appeal to the Court of Appeal of Mongolia against the
arbitral award and if the Court of Appeal of Mongolia accepts the appeal application, the
enforcement of the arbitral award will be suspended pending the outcome of the appeal.
CRML has decided to lodge an appeal to the Court of Appeal of Mongolia against the
arbitral award. (HL)