Tag Archives: metals and mining

Noricum says it will start gold production in Georgia in Q3

TBILISI, MARCH 6 2016, (The Conway Bulletin) — UK-based Noricum Gold will install a second drilling rig at its Kvemo Bolnisi mine in Georgia, it said, to bring forward the start of production to the third quarter of 2016.

Noricum said in a statement it was stepping up its operations in Georgia, after it announced new discoveries last month.

“Having recently raised £1 million which is sufficient to see us through to production in Q3 2016, we intend to firstly produce gold ore from Kvemo Bolnisi where drilling is currently underway, and then at Tsitel Sopeli,” Greg Kuenzel, Noricum’s general director, said in a statement.

Mr Kuenzel also said the company had raised £1m ($1.4m) to bring in the extra equipment and speed up production.

Noricum owns a 50% stake in the Bolnisi gold and copper project, an 860 square km complex of mines in southern Georgia.

It bought the stake for £2.6m ($3.7m) from GMC Investment in July 2015. The remaining 50% belongs to Georgia’s Caucasian Mining Group, owned by Russian entrepreneur Dmitri Troitsky.

Reserves at the Bolnisi project include 980,000 tonnes of copper, 6.6m ounces of gold and 22m ounces of silver.

ENDS

(News report from Issue No. 271, published on March 11 2016)

Norway parliament challenges Tajikistan’s TALCO to reveal its true owner

MARCH 6 2016 (The Conway Bulletin) – A parliamentary committee in Norway opened an investigation into alleged corruption by state-owned aluminium producer Norsk Hydro in Tajikistan, the second probe in the last six months into bribery against a Norwegian government-owned company working in Central Asia and the South Caucasus.

Specifically, the Norwegian parliament now wants to see Hydro’s contract with Tajikistan’s state-owned aluminium plant TALCO. It challenged the notoriously secretive TALCO, the biggest industrial asset in Tajikistan, to reveal who its true beneficial owners are. Many believe that, via a network of offshore companies, it is Tajik President Emomali Rakhmon and his family.

Media quoted Jette Christensen, MP and a member of the committee, as saying: “We and the minister must find out who are the hidden owners, therefore this is an order to both Hydro and the minister. We also believe that we must see the entire contract Hydro had with TALCO Management Ltd.”

TALCO Management Ltd., the shell company for TALCO, is registered in the British Virgin Islands and is seen by many observers as a safe haven for corrupt practices.

Norwegian newspaper Dagens Naeringsliv wrote an in-depth story about the Hydro-TALCO case in mid- February, an article that appears to have triggered parliament’s renewed interest deals between the two companies between 1993 and 2003.

Hydro have denied the allegations and sent a 17-page reply to parliament. “There are no indications of Hydro having acted in violation of applicable laws, internal rules or guidelines,” Dag Mejdell, Hydro’s chairman, said in the statement.

“The company has zero tolerance towards corruption.”

The Norwegian government owns a 34.3% stake in Norsk Hydro.

In November 2015, Norway’s minister of industry sacked Svein Aaser, chairman of Telenor, a telecoms company under investigation for corruption in Uzbekistan in 2007/8 linked to payments for 3G licences. The investigation is ongoing.

ENDS

(News report from Issue No. 271, published on March 11 2016)

Stock market: KAZ Minerals

MARCH 4 2016 (The Conway Bulletin) — London-based miner KAZ Minerals has continued to rally after publishing its annual report at the end of February.

Since Feb. 1, its share price has gained 61% in the London Stock Exchange.

In the past week, equity researchers have increased their target price and their rating for KAZ Minerals, formerly known as Kazakhmys.

Copper prices have gone up in the past weeks and this has allowed the company to be more bullish in its forecast.

One sign of warning, however, comes from the strengthening tenge. The stability of the Kazakh currency at around 350/$1 over the past weeks confirms appears to suggest that it has founds an equilibrium.

This means that last year’s foreign currency gains for KAZ Minerals were a one-off boon and the company will have to rely solely on increased production if it wants to keep its growth rate.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Russia’s Polymetal buys second gold mine in Armenia

MARCH 2 2016 (The Conway Bulletin) — Russian miner Polymetal bought the Kapan gold mine in Armenia from Canada’s Dundee Precious Metals, in a move that consolidates and expands its Armenian assets.

The deal, worth up to $50m, is Polymetal’s second acquisition in Armenia, after it bought the Lichkvaz gold mine last year for $13.2m.

Kapan, a medium-sized mine, located around 300km south of Yerevan, is surrounded by other gold reserves. Lichkvaz is 70km away from Kapan. According to the latest survey, it holds 16m tonnes of ore. Polymetal wants to make it a processing centre for its operations in Armenia.

“We believe Polymetal can transform Kapan from a low-margin asset into a capital-light profitable regional processing hub with sizable production” said Vitaly Nesis, Polymetal CEO.

Analysts agreed that the deal would bring major benefits to Polymetal’s Armenia operations.

“Polymetal bought Kapan to enable synergies with Lichkvaz. I think Polymetal will focus on developing these two mines first (before looking at others),” said Anna Mulholland, director of equity research for European metals at Deutsche Bank.

Dundee will receive $10m in cash and $15m in shares from Polymetal. Dundee is also entitled to receive a 2% royalty, capped at $25m.

Kapan produced 410,000 tonnes of ore in 2015, a 2% increase compared to 2014. Last year, Dundee said production at Kapan could rise to around 1m tonnes per year.

Polymetal’s operations are mostly concentrated in Russia. In May 2014, Polymetal bought the Kyzyl gold mine in Kazakhstan from Timur Kulibayev, son-in-law of President Nursultan Nazarbayev for $619m.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Business comment: Commodity slump hits richest

MARCH 4 2016 (The Conway Bulletin) — “Net worth” might not be hard data, but it’s still a decent indication of just how hard the economic downturn and the fall in commodity prices have hit Kazakhstan.

The owners of Kazakh miner ENRC lost a total of $1.8b in net worth in 2015, according to Forbes’ 2016 Billionaires list, showing the economic collapse that has hit Kazakhstan.

Aleksander Machkevich, Patok Chodiev and Alijan Ibragimov, the “Kazakh Trio,” lost around $600m each in 2015.

ENRC de-listed in London in November 2013 after disputes in the board and fraud investigations. The Kazakh Trio owns Eurasian Resources Group, a Luxembourg- based holding that owns ENRC.

Mr Ibragimov is the only member of the Trio registered in Kazakhstan.

Other members of the exclusive Kazakh billionaire club who have seen their fortunes dip include Dinara Kulibayeva, President Nursultan Nazarbayev’s daughter, and her husband Timur Kulibayev, each valued at $2b in 2015, down from a valuation of $2.1b in 2014.

Kazakhstan’s richest man, Bulat Utemuratov, fell 57 places in Forbes’ ranking. Mr Utemuratov is now the 771st richest man in the world, at $2.3b.

Finally, Forbes said that Vladimir Kim, who owns one-third of KAZ Minerals, saw his net worth decline from $1.8b to $1.5b.

Overall, the top five business people in Kazakhstan are worth $1.5b less than last year, that’s a 14% cut.

If the depreciation of the tenge has badly hit ordinary consumers and savers in Kazakhstan, the commodity slump remains the biggest headache for the high-flying business people.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Georgian miners end strike

MARCH 1 2016 (The Conway Bulletin) – Around 1,000 miners at the Tkibuli mine in central Georgia ended their two-week long strike after agreeing a pay rise with Georgia Industrial Group (GIG) which owns the mine. Under the deal, the company GIG will increase miners’ salaries by 7% now and another 3% in April. The miners had wanted a 40% pay rise. Last week they broke into the GIG regional office.

ENDS

(News report from Issue No. 270, published on March 4 2016)

Striking Georgian miners storm office

FEB. 24 2016, TBILISI (The Conway Bulletin) — Part of a group of 1,500 striking Georgian miners stormed an office belonging to Georgian Industrial Group (GIG) who they accuse of paying salaries far below the market rate and of presiding over poor working conditions at its coal mine at Tkibuli.

The miners have now been on strike for 12 days. The scale of the strike, both its length and the number of strikers, makes it one of the most serious in recent Georgian history.

A video showed miners wearing heavy leather jackets climbing over a compound fence and then pushing in a gate to the GIG office in Tkibuli, central Georgia. Clearly angry and distressed, miners said that they earned $200 a month which, they said, was barely sufficient to survive on.

They want a 40% pay rise and an improvement in the mine’s health and safety record. Media said that 15 miners have died in separate accidents at the mine since 2009.

GIG has said that while it sympathises with some of the workers’ demands, it simply can’t afford to increase their salaries by as much as they want because of falling prices and demand for coal.

“Saknakhshiri GIG as a company of high responsibility will not issue unrealistic promises and will not make populist statements on the immediate increase of the salaries at this stage,” the company said in a statement after meeting the miners.

For the government, the strike piles more pressure on its various economic policies ahead of a parliamentary election later this year. A recession in Russia and a fall in its own currency has hit Georgia’s economy. Growth rates have been reduced, inflation is rising.

And the Tkibuli miners are not the only group of workers striking in Georgia. Media reported that workers at a glass factor in Ksani have also gone on strike.

Other companies, especially in the mining sector, have been laying off workers.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Locals in Kyrgyzstan’s region complain on Jerooy

FEB. 22 2016 (The Conway Bulletin) — Local residents of the Talas region in Kyrgyzstan asked the government to halt the development of the Jerooy gold mine because of concerns it was damaging the environment. Last May, Russian miner Vostok-geolodobycha bought the licence to exploit the mine for $100m. Russian businessman Musa Bazhaev owns Vostok-geolodobycha. Analysts have previously said that local grievances over the environment have been exploited to leverage payment from companies developing mines.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

KAZ Minerals grows production in Kazakhstan

FEB. 25 2016 (The Conway Bulletin) — KAZ Minerals said it will grow production of copper cathode by around 70% in 2016 as new deposits of Bozshakol and Aktogay come online this year. The company plans to produce up to 155,000 tonnes of copper cathode in 2016. KAZ Minerals’ revenues fell by 21% last year compared to 2014. The company received a boost when Kazakhstan decided to abandon the tenge’s peg to the US dollar, leading to a sudden depreciation of the local currency.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Kazakhstan’s ArcelorMittal worries

FEB. 19 2016 (The Conway Bulletin) — Vijay Mahadevan, CEO of steel maker ArcelorMittal Temirtau which is one of the biggest employers in Kazakhstan, said his company will be looking at a drop in net income (EBITDA) of 13% in 2016, from $5.2b to $4.2b because of low global commodity prices. At the beginning of February, ArcelorMittal Temirtau scrapped plans to raise workers’ salaries in June because of worries about continued weak market conditions for its products.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)