The Asia Miner

OCT-DEC 2015

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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Page 49 of 71

48 | ASIA Miner | October-December 2015 Central Asia MINING focus at the Sekisovskoye Gold Project in Kazakhstan is shifting from open pit to underground mine as operator GoldBridges Global Resources seeks to boost output by 1000% by 2018. By the end of the year the company formerly known as Hambledon Mining will have closed the pit and be mining completely from un- derground. The transformation has seen a substantial drop in production this year along with a pre-tax loss, exacerbated by lower gold prices. GoldBridges reported a US$462,000 pre-tax loss in the frst six months after swinging from a $2.7 million proft a year earlier after revenue declined to US$12.8 million from $16.7 million and it was hit by administrative expenses rising to US$4.1 million from $3.3 million. Gold production in the frst half dropped to 8823 ounces of gold from 12,694 ounces and the company had to mine more ore to achieve that rate. Ore from underground mining contributed 17% of the ore in the frst half, compared to only 8% in 2014. The company says underground production will cost around 50% less than it previously thought and will boost output. It has 60,000 tonnes of ore stockpiled to be treated in the second half to supple- ment production as the open pit closes. GoldBridges said in a statement, "Our operational priority will re- main to continue to increase production from the underground mine as we move towards our target of producing 100,000 ounces of gold annually by 2018." The underground development has a recognized estimate of probable reserves totalling 2.3 million ounces at a grade of 4.09 grams/tonne with indicated and inferred resources potentially add- ing another 5.1 million ounces. The move into underground mining was originally expected to cost around US$130 million, mainly to sink a shaft to access gold reserves, but the company said it was optimizing studies to bring capital expenditure down as much as possible while maintaining the target. It is looking to access the reserve by a decline rather than the more traditional shaft-sinking approach which could reduce its initial investment by around 50%. By accessing reserves from a decline, the company could use underground haulage trucks to transport product to ground level, which it said was a commonly used and well proven method around the world. However, the company cannot fully carry out its plans without further fnancing and is in further discussions with major shareholder African Resources. CHINA Nonferrous Gold is on track for frst production at the Pakrut Gold Project in Ta- jikistan during the current quarter. The com- pany, formerly known as Kryso Resources, is targeting completion of the processing plant in September and the smelter in Octo- ber. This follows delays caused by adverse weather and problems with the company's plans to import a Chinese labour force. Initial production looks set to run at around 1000 tonnes a day, rising to 2000 as the ramp-up of phase one completes at the end of year two, and then rising again to 4000 tonnes per day for the rest of the 19- year mine life. A bankable feasibility study conducted by SRK Consulting worked off the basis of a 4.7 million ounce resource. Cash costs in- cluding depreciation and amortisation were set at US$576 per ounce. In early September the company award- ed the processing and smelting agreement for the Pakrut project to China Nonferrous Hongtoushan Fushun Mining Group Co, Ltd (CNHFMG). The contract is for an 18-month term and was awarded following a compet- itive tender process. The term represents a two month production preparation period, a four month trial production period and a 12 month production period. Under the terms, China Nonferrous will pay RMB17.99 (around US$2.80) per gram of fnished gold once the 12 month produc- tion period begins. Prior to this China Non- ferrous will cover the labour and associated costs of CNHFMG. Once in production, in the event the recovery of the plant is above the Bei- jing General Research Institute of Mining and Metallurgy forecast rate over the life of production of 82.99%, CNHFMG will share 40% of the profts from the upside directly due to the increased recovery. In the event recovery is below 75%, CN- HFMG will bear 20% of any loss incurred by the company from the project due di- rectly to recovery levels. While Kryso could see the potential of Pakrut, it took the positive attitude of ma- jor Chinese resources player China Non- ferrous Metals International to unlock the value. This process began in 2010 when an £11 million investment secured it a 30% stake in Kryso. China Nonferrous Metals now owns more than 38% of the company, a position of infuence refected in the change of name in November 2013 to China Nonferrous Gold. Other Chinese investors also now account for major blocks of Kryso shares, so the transformation into a Chinese majori- ty-owned company is largely complete. Sekisovskoye moves underground Pakrut gold production set to start Preparations at the Pakrut Gold Project, which is three hours by road northeast of the capital of Tajik- istan, Dushanbe.

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