Tag Archives: gold

Armenian Lydian secures more support

JULY 4 2017 (The Bulletin) — Armenian gold miner Lydian said that it had secured another $25m loan from the Orion and Resource Capital funds, specialist mining creditors, to help pay for the construction of its operations at its Amsular site in the south of the country. Earlier this year it also secured a $50m loan for funding on the same project from ING Bank. Armenia has been looking to boost mining projects.

ENDS

(News report from Issue No. 336, published on July 16 2017)

EBRD loans gold project in Kazakhstan

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JUNE 22 2017 (The Bulletin) — The EBRD agreed a loan of $140m for Bakyrchik Mining Venture, a subsidiary of London-listed Polymetal International, to develop the Kyzyl gold deposit in Kazakhstan. The EBRD said that the loan would create 400 jobs and ensure good governance over the project. Previous mining projects in Kazakhstan have been plagued by governance issues.

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(News report from Issue No. 334, published on June 26 2017)

Stock market: Georgia Healthcare, KAZ minerals

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JUNE 19 2017 (The Bulletin) — It was a poor week for stocks in companies linked to Central Asia and the South Caucasus. All stocks were either stagnant or fell, with the notably exception of Georgia Healthcare, which is perhaps the standout performer of the year.

By the end of the week, Georgia Healthcare stock had risen by 12% to 394.5p, smashing past its previous all-time high of 373p hit in February.

As for the fallers, the heaviest tumbles were taken by KAZ Minerals and Centerra Gold. KAZ Minerals, the Kazakhstan focused copper producer, fell 11.4% to 471.5p. This, although it looks bad, was merely a correction to return to trading at a level it has been anchored around for the past month.

Centerra Gold’s shares are volatile. The Canada-based miner whose main asset is the Kumtor gold mine in eastern Kyrgyzstan is locked in a near permanent dogfight with the Kyrgyz government for control of its asset. This week, though, traders said that short-selling had knocked the value of its shares. It finished the week at C$6.72, a fall of over 8%, and its lowest level since the start of March.

Other notably fallers include Nostrum Oil & Gas, which lost around 4.7% of its stock price, more than the fall in oil, and TBC Bank, a Georgian bank, which also shed around 5% of its value, possibly because inflation data remained stubbornly high.

ENDS

(News report from Issue No. 333, published on June 19 2017)

Stock Market: Tethys, Centerra Gold

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APRIL 6 2017 (The Conway Bulletin) — Shares in oil producer Tethys traded up at 1.73% on Monday despite full year results showing that its revenues from oil and gas sales had fallen by 47% to $11.7m.

It blamed the drop in revenue on the devaluation of the tenge in the second half of 2015 and a drop in oil output. Tethys sells most of its production on the domestic Kazakh market.

Despite the drop in revenues, Tethys said that its losses for 2016 were actually smaller than its losses in 2015, perhaps driving the price up 26% on the London Stock Exchange. Tethys if one of the region’s most illiquid stocks.

Most of the savings came in tight cost-cutting in administrative issues. It said that losses for 2016 were $46.9m compared to $74.6m in 2015. Tethys is pulling out of a project with China’s CNPC and France’s Total in Tajikistan because it couldn’t keep up with its call payments. It is also locked in a commercial dispute in Kazakhstan which has meant that the bank accounts of its subsidiary have been frozen.

Despite hitting a 6-month high of C$7.65, analysts have been lining up to give Centerra Gold’s stock a hefty ‘buy’ rating.

CIBC gave it a target rating of C$10 this year and CSFB went even further with a rating of C$10.25. The consensus target price is C$8.08.

The buy ratings appear to be based on strong gold prices which are enough to shrug off Centerra Gold’s spat with the Kyrgyz authorities. Kyrgyzstan wants a direct stake in the Kumtor gold mine, its largest industrial asset, which is wholly owned by Centerra Gold. Instead it currently holds a 32.7%% stake in Centerra Gold.

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(News report from Issue No. 323, published on April 6 2017)

Centerra expects to have to pay Kyrgyz fines

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BISHKEK, FEB. 23 2017 (The Conway Bulletin) — In its 2016 results Toronto-listed Centerra Gold said that it expected to have to pay all or part of a set of fines handed out to it by Kyrgyz environmental bodies over what it had previously described as an attempt by the government to pressure it into ceding a larger stake in the Kumtor gold mine.

Centerra Gold is locked in a battle with the Kyrgyz government over ownership of the Kumtor mine. Kyrgyzstan owns a 32.7% stake in Centerra Gold but it wants to own a direct stake in the mine which generates about a tenth of its GDP.

Last year Centerra launched an action at an international arbitration court after a Kyrgyz judge ordered cash generated by the Kumtor mine to stay in the country.

“If the Company were obligated to pay these amounts, it would have a material adverse impact on the Company’s future cash flows, earnings, results of operations and financial condition,” Centerra said.

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(News report from Issue No. 318, published on Feb.24 2017)

Buy gold, not som, says Kyrgyz Central Bank chief

BISHKEK, FEB. 15 2017 (The Conway Bulletin) — In an interview with the Bloomberg news agency, Tolkunbek Abdygulov, head of the Kyrgyz Central Bank essentially told ordinary Kyrgyz that they should buy gold rather than keep their savings in the unpredictable Kyrgyz som.

Gold is considered a safe-haven for investors and savers whenever the global outlook is fragile but it holds added importance in Kyrgyzstan, which relies on the Kumtor gold mine to produce over a tenth of its GDP.

Like the rest of the region, an economic slowdown has hit the Kyrgyz economy, denting GDP growth and undermining the economy. The Kyrgyz som has slid from around 50/$1 to 69/$1.

Mr Abdygulov appeared to reference this som weakness in his interview with Bloomberg.

“Gold can be stored for a long time and, despite the price fluctuations on international markets, it doesn’t lose its value for the population as a means of savings,” he was quoted as saying.

Over the past couple of years, the Kyrgyz Central Bank has offered to sell gold in different sizes to ordinary Kyrgyz and to store it safely. Mr Abdygulov said that the Bank had sold around 140kg of gold through this system.

And the Central Bank appears to be leading by example. It has increased its purchases of gold while many other central banks have reduced theirs. Bloomberg data showed that Kyrgyzstan currently holds around $190m of gold in its reserves, four times the level of 10 years ago.

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(News report from Issue No. 317, published on Feb.17 2017)

Lydian mining takes loan to operate in Armenia

FEB. 9 2017 (The Conway Bulletin) — The Armenia-registered subsidiary of Canada’s Lydian mining has taken out a loan of $50m with ING Bank to fund buying equipment at its gold mine in southern Armenia. Lydian said that the cash would be used to buy crushing, conveying and electrical equipment for its 100%-owned Amulsar Gold Project. It expects gold production to begin in 2018.

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(News report from Issue No. 316, published on Feb. 10 2017)

Chinese miner operates in Kyrgyzstan

DEC. 26 2016 (The Conway Bulletin) — The Chinese company Full Gold Mining produced its first batch of concentrated gold at its Ishtamberdy gold deposit in Kyrgyzstan’s southeast region of Jalabad, the Kyrgyz government said. The project had stalled since 2011 because of a series of anti-mining protests and demonstrations against excessive Chinese control over Kyrgyzstan’s industry.

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(News report from Issue No. 311, published on Jan. 6 2017)

Kyrgyzstan-focused Centerra Gold scraps quarterly dividend for first time since 2010

BISHKEK, DEC. 9 2016 (The Conway Bulletin) — Canadian gold miner Centerra Gold said it suspended its regular quarterly dividend issue because the bank accounts of its subsidiary in Kyrgyzstan that operates the Kumtor mine has been frozen.

Scrapping the quarterly $0.04 dividend payout to shareholders breaks with a six-year tradition and highlights tension between the Kyrgyz government and the Toronto- listed mining company. The Kyrgyz government, owns a 27% stake in the company but wants, instead, to own a direct stake in Kumtor.

“In light of the current restrictions relating to funds held at Centerra’s wholly-owned Kyrgyz Republic subsidiary, Kumtor Gold Company, Centerra’s Board at its regularly scheduled board meeting yesterday decided against declaring a third quarter dividend,” the company said in a statement.

“In addition, the Board has decided to suspend future dividends for the time being.”

Kumtor’s bank accounts have been frozen since June because of an unpaid environmental fine. Centerra has said the fine is politically motivated to force it to relinquish more equity in the gold mine. For the past couple of years, Kyrgyzstan has argued that it wants to give up its share in Centerra in exchange for a direct 50% stake in Kumtor.

Kumtor is Centerra’s biggest asset. In 2015 it accounted for 97% of its total revenues. And the gold mine is also vital for the Kyrgyz economy. It is its single biggest industrial asset, making up an estimated 10% of total GDP.

Reuters quoted RBC Capital Markets analyst Stephen Walker who said that for every quarter Centerra fails to pay a dividend, Kyrgyz state- owned Kyrgyzaltyn will lose around $9.5m in revenue – a vital source of funding.

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(News report from Issue No. 309, published on Dec. 16 2016)

Stock market: Centerra Gold

NOV. 11 2016 (The Conway Bulletin) — Encouraging production results at Kyrgyzstan’s largest gold mine, Kumtor, supported Centerra Gold shares in Toronto, although they were weighed down by a fall in the price of gold.

The company said that because a court in Bishkek has restricted its access to cash held by its Kumtor gold mine, it could not pay a quarterly dividend and may have to seek a cash injection to continue operations. It didn’t give any more details of this but it would be a departure from previous policy.

The spat with the Kyrgyz government, which has become increasingly heated in the past two years, seems to be constantly on the verge of breaking point.

In general, though, Centerra’s share price has followed the price of gold. However, should news from Kyrgyzstan continue to be negative, Centerra’s stock price might start diverging from this pattern.

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(News report from Issue No. 304, published on Nov. 11 2016)