Industry: Mineral Region: Russia Transaction price: $1 million Transaction method: equity investment
The Project
The Project includes the development of a large gold deposits in Kostanay region with the further processing of gold using gravity leaching technology and production of Dore bars. Final products (Dore bars) are planned to be sold to National Bank of RK.
The Company owns license for exploration of 10 prospective areas for a total amount of proved reserves of 36.5 mln tonnes of ore. 15.1 mln tonnes of ore reserves and resources has been approved by a state committee (GKZ). Total amount of gold reserves and resources comprises 113.4 tonnes of gold.
The Company”s shareholders invested circa USD15 mln of own funds in exploration and evaluation of deposits, bearing significant level of risk at the initial stage. Currently, the Company is performing ongoing G&G works and its methodology of reserves evaluation has been approved by Wardell Armstrong as the one corresponding to JORC best practices.
Sales proceeds will be denominated in USD, while majority of costs denominated in KZT.
The Market
Despite the overall adverse effect of COVID-19 pandemic over the global mining operations, gold prices have risen for 33% in 2020 as compared to 2019 and are projected to sustain on $1700-1800 per Oz in the coming 2-3 years.
In the mid-term, gold prices are forecasted to keep high, fueled by investor’s desire to seek safe-haven assets at times of economic recovery. Long-term gold price forecasts also remain largely optimistic with the gold production levels to recoup in the 2021-2022.
Gold mining companies managing open-pit deposits (which are largely dependent on diesel) and operating in countries with significantly devalued currencies, experienced increase in gross margin due to falling oil prices and strengthening of USD.
In 2021, Kazakhstan in introducing a new government support instrument called “strategic investment agreement” which provides tax benefits and stable tax and legal framework for the term of contract validity.
Team and the Company’s financial state
There are no external bank loans, pledges over company’s assets or active litigations or claims. All expenditures to-date have been financed by the shareholders’ loans.
The Company has a strong team of professionals managing the business, who possess circa 30-40 years of mining experience.
Shareholder’s structure does not include any PEPs (politically exposed persons).
Investment Opportunity
The company is looking for potential strategic or financial partner. The amount of investments and share in a project are subject to negotiations.