Aug 27, 2014
Trish Saywell, Northern Miner
Vancouver-based Dynasty Gold (TSXV: DYG) was one of the first Canadian juniors to explore for gold in China. It entered into a cooperative joint-venture in December 2003 with a Chinese state-owned enterprise to explore for gold on a 1,000 sq. km property called Hatu in remote northwestern Xinjiang province.
Ivy Chong, Dynasty Gold’s president and chief executive, recalls that the early years of the partnership went well. “At the beginning it was okay,” she says. “When we came in they welcomed us and we were written about in the press and appeared on their evening news broadcasts.”
But then suddenly, Chong says, things “hit a brickwall” when Dynasty Gold pushed the Chinese partner to fulfill its commitments to apply for a mining permit. In 2008, she says, Xinjiang NonFerrous Metals became uncommunicative.
Frank Turner, a lawyer and co-head of Asia-Pacific for business law firm Osler, Hoskin & Harcourt, has some advice when it comes to setting up joint-venture contracts in China.
“If I was structuring this deal, the first thing I would want to do is make sure that in the event of a dispute we did not litigate in China,” Turner says in an interview from his office in Calgary. “This would be the case in lots of different countries. You would want to find an international arbitration protocol that both parties are comfortable with and write it into the contract.”
Turner also recommends that clients get some form of local partner besides their joint-venture partner that knows the local dynamics and is exclusively representing the client’s interests.
“You’d want to have some form of representation on the ground that understands the local rules of engagement and can report back accurately and help you navigate cultural differences — a consulting company or a local employee,” he explains. “Some of my clients in emerging markets have a local partner, not their joint-venture partner, who can provide good local advice as to the norms of doing business in the jurisdiction.”
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