LONDON (Alliance News) - GCM Resources PLC on Tuesday said media reports last week that suggested the government of Bangladesh had decided against open-pit mining at a project near the company's own coal mine were "inaccurate and misleading" as it launched legal proceedings.
GCM was prompted to issue a statement last Friday clarifying that it had received no notice from the Bangladesh government that it intends to alter its contract with GCM over the Phulbari coal project, following reports in the Bangladesh media that the government has decided not to proceed with open pit mining at the nearby Barapukuria coal mine site.
GCM has a contract with the Bangladesh government to explore, develop and mine in its licence area and is awaiting government approval to proceed with its mine development scheme, but the media reports sent shares plummeting, closing down 25% last Friday.
On Tuesday, GCM said the reports that the government had decided against the mining method at the Barapukuria coal mine were false and claimed media outlets in the country had since "accurately reported" what happened.
"GCM has obtained feedback from sources from within government and the Bangladesh media which confirms that no decision has been made on whether the government's Barapukuria Coal Mining Co Ltd, which is currently mining coal in the Barapukuria coal basin through underground mining, should adopt the high coal production open pit mining method. In addition it was found that there were no grounds to suggest that the company's Phulbari coal project was impacted in any way," said GCM Resources.
"Since the announcement on Friday 23 September 2016, further Bangladesh media articles have accurately reported that a technically orientated progress meeting was held in government circles but no decisions were made regarding mining methods," GCM added.
However, the company said it "is deeply concerned" and has instructed its lawyers to issue a legal notice to a media outlet to protect its interests. GCM said it was concerned "regarding the negative impact that unsubstantiated and speculative media reporting can have on its and its stakeholders' image, reputation and financial position".
GCM said it is confident that the Phulbari coal project will continue to contribute towards the country's development and said it is "in the best interests of the government, the nation and the local community that the project proceed as quickly as possible."
GCM shares were up 17% to 16.25 pence per share on Tuesday afternoon.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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GCM Resources (GCM)