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A convoy of Wagner mercenaries drives between Bangui, in the Central African Republic, and the Cameroon border on Sept. 22, 2023.JIM HUYLEBROEK/The New York Times News Service

A Canadian-owned gold mine in central Africa has emerged as a key source of financing for Russia’s global military operations, leaving its owners fighting for compensation.

Four years after its biggest African gold mine was seized by Russian mercenaries, Vancouver-based Axmin Inc. AXM-X is seeking a cash settlement and a possible share of the mine’s royalties from the government of the Central African Republic (CAR), which allegedly allowed the mercenaries to grab the mine.

The U.S. Treasury Department says Axmin’s mine at Ndassima in the CAR has become a key producer of financing for the Wagner Group, a Kremlin-linked military contractor, and its operations in Ukraine and Africa. The mine has an estimated value of US$1-billion to US$2.8-billion.

When rebels captured the mine from Axmin after war erupted in the CAR in 2012, the company abandoned its operations and declared force majeure. Six years later, the Wagner Group arrived in the country under an agreement to fight the rebels and provide security for the government.

In 2020, Wagner troops seized control of the mine, and it was placed under a Wagner-affiliated company, Midas Ressources, which is based in the CAR.

Axmin says it valued the mine at US$340-million in 2011. But a decade later it was worth US$2.8-billion, according to a CAR government document cited by The Sentry, a U.S.-based research organization, in a report last year. Some reports say it is producing almost US$300-million in annual revenue for Wagner.

The U.S. Treasury Department imposed sanctions on Midas last June, accusing it of being “engaged in illicit gold dealings to fund the Wagner Group to sustain and expand its armed forces, including in Ukraine and Africa.”

The mine at Ndassima contains gold valued at more than US$1-billion, the department said, adding that the Russian mercenaries have prevented the government from inspecting the mine. It and other Wagner assets in the CAR have become “key to financing Wagner’s operations in the CAR and beyond.”

Axmin, now primarily owned by Chinese investors, continues to assert its ownership of the mine. It is trying to resolve its dispute with the CAR government at the International Arbitration Chamber of Paris (CAIP), seeking “full compensation for the net present value of the mine at the time of its unlawful expropriation.”

John Gravelle, a recently appointed Canadian member of Axmin’s board of directors, said the company is confident the CAR government will lose the arbitration case. “They’re going to lose, and then it’s going to be up to them to decide how they’re going to take care of their obligations,” he told The Globe and Mail in an interview.

Mr. Gravelle said Axmin is looking for whatever cash settlement it can achieve through the arbitration process “and getting a royalty on the project and things like that in order to get paid.”

Axmin began gold exploration in the CAR in the 1990s. The Ndassima project was the country’s first industrialized gold mine, surrounded by a further 1,200 square kilometres of additional exploration rights.

In 2010, the CAR government granted Axmin a 25-year mining permit for the Ndassima property, which is located about 400 kilometres northeast of the capital, Bangui. The company paid an US$11-million “signature bonus” and issued US$7.8-million worth of shares to the government.

When the war erupted, the government said it would “create a safe and stable environment” for Axmin to resume operations, but the site remained in the hands of rebel groups and small-scale miners. More than 60 people were killed in two collapses of small-scale mines at the site.

In early 2020, Axmin was told its mining and exploration permits had been withdrawn and transferred to Midas Ressources.

Since then, the mine has been significantly expanded, and Wagner has used its military muscle to assert greater control of the area. Over the past three years, the Russian mercenaries have killed dozens of civilians and rebels around gold mines in the CAR, including at Ndassima, according to a report by U.S.-based research group the Armed Conflict Location and Event Data Project.

In a more detailed report last year, The Sentry quoted several villagers near the mine who said Wagner troops had often killed local civilians who were doing small-scale mining at the site. Satellite photos showed that a mining village near Ndassima had been “wiped off the map” between November, 2020, and May, 2022, the report said.

Enrica Picco, the Central Africa project director for the U.S.-based International Crisis Group, said Wagner’s operations in the CAR were an attempt to establish Moscow’s influence in Africa by providing Russian military services in exchange for access to Africa’s resource wealth.

Ms. Picco said cancelling Axmin’s licences and offering the mine to Wagner were part of a deal between Russia and the CAR government when the two sides were negotiating Wagner’s deployment in the country in 2017.

After the death of Wagner founder Yevgeny Prigozhin in a mysterious plane crash in Russia last August, Wagner’s operations in the CAR are reportedly being transferred to the control of the Russian government.

Axmin hired a CAR lawyer and opposition leader, Crépin Mboli-Goumba, to challenge the revoking of its mining permits. Three years of legal efforts – including a letter of support for the company from Canada’s ambassador to the CAR – led to a failed mediation effort in Ivory Coast in January, 2023, and then to the Paris arbitration chamber.

Mr. Mboli-Goumba has now filed a suit against Axmin, accusing it of failing to pay his legal fees.

Mr. Gravelle denied the claim. “There are no amounts unpaid,” he said.

Global Affairs Canada declined to comment on the disputes at the mine, including the Russian takeover, citing “reasons of commercial confidentiality.”

Jean-Pierre Godbout, a spokesperson for the department, told The Globe that the government “remains preoccupied” by the presence of Wagner in the region. “We are monitoring its impact on the protection of foreign investment,” he said.

With a report by Geoffrey York in Johannesburg

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