Alamos Gold filing US$1 billion lawsuit against Republic of Turkey

Alamos Gold Inc.‘s [AGI-TSX, NYSE] Netherlands wholly-owned subsidiaries, Alamos Gold Holdings Cooperatief UA and Alamos Gold Holdings BV, 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, and is expected to exceed $1 billion, representing the value of the company’s Turkish assets. All monetary amounts are in US dollars unless otherwise stated.

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 its subsidiaries have invested over $250 million in Turkey, unlocked over $1 billion 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 Kirazli Gold Mine, the government failed to grant a routine renewal of the company’s mining licenses, despite Alamos 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.

Alamos had been granted approval of all permits required to construct Kirazli, including the Environmental Impact Assessment approval, Forestry Permit, and GSM (Business Opening and Operation) permit, and certain key permits for the nearby Agi Dagi and Camyurt 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, Alamos 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 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 CEO of Alamos Gold.