Although lacking one essential ingredient — financing — Dingman Industries (ASE) is proceeding with plans to treat arsenic-rich gold concentrates produced in the Soviet Republic of Kazakhstan. Based on a target throughput rate of 100,000 tons of concentrates per year, Dingman expects to produce about 400,000 oz. of gold annually from several different plants.
Under the terms of the joint venture agreement, Dingman will purchase the concentrates for 20% of their intrinsic gold value, then “reconcentrate” the gold through new facilities. Dingman has also agreed to repair, or, where necessary, rebuild, the local roasters.
The gold concentrates, which average about 6% arsenic, have been stockpiled at several gold mines in Kazakhstan since the government banned production from local smelters over two years ago.
Because power has been shifting, on a weekly basis, between the central authority and the Republics of the USSR, Dingman’s original agreement with Glavalmazzoloto (the central authority) has been renegotiated with regional authorities Kazzoloto and Yakutzoloto, the company says.
The Canadian junior is aiming for a gross operating return equal to 55% of the value of the concentrates, assuming operating costs of approximately 25% of concentrate value. After the initial capital investment has been repaid, the partners will split the remaining profits equally.
Until the ambitious plan has been finalized to the satisfaction of both parties, Dingman is arranging to sell the arsenic-bearing concentrates to European smelters.
Dingman shares are trading around the 80 cents level, up from 15 cents lows before the deal was first announced in July.
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