Mining opportunities emerge in former Soviet republics

Emerging from under the yoke of Soviet rule, the countries of Central Asia are struggling to transform themselves into market-based economies.

Uzbekistan has been especially aggressive in the area of market reform. The government is actively seeking investment by granting tax breaks to some foreign firms, among other measures.

The country has a stable political environment strongly controlled by ex-communist President Islam Karimov. But this may partly reflect the fact that Karimov’s party recently banned political opposition.

Although the som, the Uzbek currency, is not convertible at this time, the government has passed new tax and bankruptcy laws aimed at appeasing foreign investors.

The country’s potential is well-illustrated by a heap-leach project aimed at processing stockpiled, non-mill-grade ore from the Muruntau gold mine. A joint venture

between Newmont Gold (NYSE) and the Uzbek government, the project should transform the country into the world’s eighth-largest producer of the yellow metal.

Uzbekistan is not the only former Soviet republic that is seeking foreign investment in mining, as The Northern Miner learned on a visit to the region. What follows is a survey of some of the projects being worked.

* In Tajikistan, Nelson Gold, a British-based company listed on the Toronto Stock Exchange, has a 49% interest in the Zeravshan project. The remainder is held by the Tajik government.

In the first quarter of 1996, the project should begin producing from the Jilau deposit, which contains 25.3 million tonnes of oxide ore grading 1.72 grams gold per tonne.

A carbon-in-leach plant will treat high-grade ores, with an annual production projected at 80,000 oz. gold at a cash cost of US$175 per oz. A heap-leach operation for lower-grade material will yield an additional 125,000 oz. per year.

* Among Nelson’s other holdings in the country is the Taror copper-gold deposit, which contains 12.5 million tonnes grading 6.78 grams of gold per tonne and 0.78% copper. The company also has a stake in the Chore deposit, 135 km east of Jilau and Taror, and rights to explore another 3,000 sq. km area in the country.

* Meanwhile, Great Britain’s Lonrho and South Africa’s Gencor have made a deal with the government of Uzbekistan for the Amantaytau and Daugiztau deposits, situated 25 and 45 km southwest of Muruntau, respectively. The resource of both deposits is about 9 million oz. of gold, and capital costs are estimated at US$100 million. The operation should produce about 320,000 oz. of gold annually.

* Brenna Resources (VSE) and Kinross Gold (TSE) have been active in Uzbekistan for some time. The companies, together with their Uzbek partners, plan to heap-leach low-grade ores at the Mardzanbulak mine. They also have an interest in the Zarmitan mine.

* MK Gold (NASDAQ) holds a 30% interest in the Dzeruy project in Kyrghyzstan. The underground mine has a resource of 1.6 million oz. gold, and capital costs are projected at US$133 million. The project is expected to produce 150,000 oz. per year, starting in 1997.

* Kazakhstan, by far the largest country in Central Asia, also has the largest number of foreign mining companies operating within its borders. Among the most prominent of these is the Bakyrchik gold mine, which was once operated by Minproc and Altynalmas, the Kazakhstan mining company. Minproc has since sold its interest in the mine.

* Pegasus (TSE) and Goldbelt Resources (VSE) have joined forces in processing the Leningorsk gold tailings in eastern Kazakhstan. The 15-year project contains 102 million tonnes grading 0.74 gram gold and 5.71 grams silver per tonne.

* Placer Dome (TSE) has signed a joint-venture agreement with the Kazakhstan government for the Vasilkovskye project, which has a geological resource of 138 million tonnes grading 3.03 grams gold per tonne.

* Altyn-Tas, a joint venture between Moonstone Resources and a state-owned mining company, was granted an exploration licence for gold and diamonds covering 56,000 sq. km, excluding the Akbakai gold mine.