Tag Archives: metals and mining

Interview: Gold-plated resiliance in a tough year

>> Artem Volynets, the CEO of AIM-listed Chaarat Gold, had to deal wtih war and a coup in 2020, on top of the global pandemic.

JUNE 16 2021 (The Bulletin) — A global pandemic meant a tough 2020 for most people but for Artem Volynets, the CEO of AIM-listed gold miner Chaarat Gold, it was just one issue that he had to deal with. He also had to navigate a war and a coup.

“Yes, it was a complicated time,” he told The Bulletin over lunch in central London, flashing a pearl-white, relaxed, smile. 

“But in many ways it made us stronger as a company.”

Chaarat Gold is the owner of the Kapan gold mine in southeast Armenia and two gold concessions in Kyrgyzstan, Tulkubash and Kyzyltash. In 2020, Armenia lost a war to Azerbaijan for the disputed region of Nagorno-Karabakh and in Kyrgyzstan, a coup in October overthrew the government.

Volynets said that a third of his 1,000-person workforce at the Soviet-era Kapan gold mine was called up for active duty.

“Even so, if anything our reputation in the region was strengthened by the war,” he said. “We were the ones paying the taxes, keeping production going and jobs open.”

Chaarat Gold bought the Kapan mine from Russia’s Polymetal in 2019 for $55m, a deal that Volynets said had proved to be good value. 

He dodged discussing criticism of Armenian PM Nikol Pashinyan for allegedly dragging his feet over clearing protesters who have blocked access to another foreign-owned gold mine at Amulsar, but he was keen to discuss the expropriation in Kyrgyzstan of the Kumtor gold mine, the biggest in the country, from its Toronto-based owners, Centerra Gold.

Western investors in Bishkek have now described Kyrgyzstan as an “investment pariah” but Volynets was more circumspect.

“It’s very much an isolated incident that has to do with one particular foreign investor and one particular project,” he said. “We have been assured that we have no problems.”

Still, the noise around the expropriation of Kumtor has made life more difficult for Volynets and Chaarat Gold. Last month it said that raising finance for its Tulkubash project had slowed and that its first gold production was now delayed by a year to the second half of 2023.

In 2018, Chaarat Gold had offered to buy Kumtor, but Centerra Gold had turned down the offer.

“We’re not interested in it any more but we are still looking around at other FSU projects,” Volynets said.

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— This story was published in issue 48 of the Central Asia & South Caucasus Bulletin, on June 16 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

Centerra Gold says it wants to negotiate with Kyrgyz government

JUNE 15 2021 (The Bulletin) — In an interview with the Bloomberg news agency, Scott Perry, the CEO of Centerra Gold, said that he wanted to negotiate a “divorce” settlement with the Kyrgyz government for the Kumtor gold mine which Kyrgyz officials expropriated in May. The Kyrgyz government also owns a 26% stake in Centerra Gold.

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— This story was published in issue 48 of the Central Asia & South Caucasus Bulletin, on June 16 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

IMF says that Kumtor row could damage Kyrgyz economy

BISHKEK/JUNE 9 2021 (The Bulletin) — The IMF said that without a quick resolution to the row between Toronto-listed Centerra Gold and the Kyrgyz government over ownership of the country’s largest gold mine, Kyrgyzstan will miss its GDP estimates.

Conspicuously avoiding naming Centerra Gold or Kumtor, the gold mine at the centre of the row, the IMF also said in a statement that the expropriation of the mine undermined foreign investor confidence.

“Directors also stressed the criticality of political stability, policy predictability, and a market-friendly business environment,” the IMF’s executive said in comments on both a consultation session with Kyrgyz officials and also its GDP growth estimates for Kyrgyzstan of 3.8% this year and 6.4% in 2022.

“A speedy and transparent resolution of the ongoing commercial dispute with the largest foreign investor would be critical to ensure uninterrupted gold production while protecting the environment.”

The Kumtor gold mine is the lynchpin of the Kyrgyz economy, contributing up to 15% of its GDP.

Western investors based in Bishkek have said that the expropriation last month of the mine by the Kyrgyz government had turned Kyrgyzstan into an “investment pariah”. The government has justified its expropriation because of alleged environmental damage at Kumtor, an accusation that Centerra Gold disputes. Centerra Gold has launched international arbitration.

Despite the growing pressure, neither Pres. Sadyr Japarov nor senior Kyrgyz officials appear to be too concerned. Mr Japarov has not commented on the expropriation and has instead promoted the official who steered it to be the Kyrgyz economy minister. Officials have taken journalists on a press trip to Kumtor to show them how efficiently it is now being run.

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— This story was published in issue 487 of the Central Asia & South Caucasus Bulletin, on June 9 2021

— Copyright the Central Asia & South Caucasus Bulletin 2021

Nova Resources increases bid for KAZ Minerals

ALMATY/FEB. 4 2021 (The Bulletin) —  Nova Resources, a company linked to the Kazakh elite, increased its offer to buy miner KAZ Minerals off the London Stock Exchange by 22% because of rising copper prices.

In a takeover bid that has become increasingly acrimonious, Nova Resources, which is led by KAZ Minerals chairman Oleg Novachuk and former chairman Vladimir Kim, wrote to shareholders to promote what it said was a “compelling valuation”.

“The major reason we want to take this company off-market is because as a public company we do not have enough entrepreneurial flexibility to run this kind of risk,” the letter said.

Some analysts take a different view. They have said that both Mr Novachuk and Mr Kim are close to the top of the Kazakh elite and that these elite have now decided to pull in their assets. This includes, the analysts said, taking KAZ Minerals off the London Stock Exchange.

And there is precedence. In 2013, after a number of corruption allegations, the founders of ENRC took the company off the London Stock Exchange. ENRC was also a Kazakh mining company linked to the Kazakh elite.

Last year, KAZ Minerals bought the $8b copper mine Baimskaya in Chukotka, Far East Russia. The project, one of the biggest copper projects in the world, has been delayed because of a Russian government drive to upgrade infrastructure across the remote region that will slow the Baimskaya development.

Nova Resources wants to buy the 61% of KAZ Minerals that it doesn’t own but some shareholders have said that the new offer is still too low. 

“As we forecast that KEC Minerals will generate more than $5.5bn of ebitda over the next three years, it is our opinion that the £7.80 per share offer price still materially undervalues the company,” said London-based fund RWC Partners.

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— This story was first published in issue 471 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2021

Kazakh billionaire Ibragimov dies

ALMATY/FEB. 3 2021 (The Bulletin) —  Billionaire Alizhan Ibragimov, one of the wealthiest men in Kazakhstan, died aged 67.

Ibragimov, an ethnic Uyghur, was part of a group of businessmen known as the Euraisan Trio which controlled Kazakh miner ENRC. This trio, which also includes Aleksandr Mashkevich and Patokh Shodiev, became a familiar feature in the British press for seven years from 2006 during ENRC’s tumultuous listing on the London Stock Exchange. 

ENRC went from breaking new ground as the first miner in the former Soviet Union outside Russia to list on a Western stock exchange, to acrimony after Ibragimov and his partners bought it off the LSE in 2013, reportedly for nearly $5b, in the face of mounting corruption allegations.

After it delisted from the LSE, ENRC rebranded as Eurasian Natural Resources Corporation. It owned several other companies too. 

The Eurasian Trio were said to be working in close cooperation, perhaps even on behalf of, the Kazakh elite. Ibragimov was ranked by the Forbes business magazine as one of the five richest men in Kazakhstan with a wealth of $2.3b.

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— This story was first published in issue 471 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2021

Kazatomprom says will reduce output in 2021

FEB. 1 2021 (The Bulletin) — In production guidance for 2021, Kazakh uranium producer Kazatomprom said that it would continue to reduce output in line with a plan put forward in 2018 to boost uranium prices. It also said that its output had been hit by the coronavirus pandemic and that it had been forced to suspend production at two sites in Turkestan, south Kazakhstan. Kazatomprom has a listing on the London Stock Exchange and is the world’s biggest uranium miner.

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— This story was first published in issue 471 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2021

Anglo Asian Mining takes control of mines in Nagorno-Karabakh

JAN. 22 2021 (The Bulletin) — Anglo Asian Mining, the gold mining company part-owned by the Azerbaijani government, said that its ownership of three potential mines in Nagorno-Karabakh had been “restored” to it. Azerbaijan defeated Armenia in a six-week war for control of the disputed region last year. 

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— This story was first published in issue 469 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2021

Chaarat says beats 2020 output expectations

JAN. 21 2021 (The Bulletin) — London-based Chaarat Gold said that it had exceeded production expectations at its Kapan mine in Armenia. In a media interview, Chaarat CEO Artem Volynets said that despite a war between Azerbaijan and Armenia over Nagorno-Karabakh and a coup in Kyrgyzstan that could have destabilised its Kyrgyz operations, Chaarat had had a decent year.

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— This story was first published in issue 469 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2021

Coronavirus forces closure of Kazatomprom mines

JAN. 20 2021 (The Bulletin) — Kazatomprom, Kazakhstan’s majority state-owned uranium miner, suspended operations at two of its mines in the south of the country after workers tested positive for the coronavirus. Kazatomprom didn’t say how many workers had contracted the coronavirus at its sites in the Turkestan region, nor for how long they will be closed for. Kazatomprom also didn’t say what effect the closures would have on output.

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— This story was first published in issue 469 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2021

KAZ Minerals says that H1 copper output was higher than expected

JULY 30 (The Bulletin) — KAZ Minerals, the Kazakhstan-focused and London-listed, copper producer said that output for the first half of the year was higher than expected. It said that copper production was up by 4% and that gold production was up by 25%. Importantly, it said that while the coronavirus pandemic had not disrupted its operations so far a second lockdown in Kazakhstan had  “heightened risk”. Kazakhstan went into a second lockdown in early July.

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— This story was published in issue 455 of the Central Asia & South Caucasus Bulletin, on July 31 2020.

— Copyright the Central Asia & South Caucasus Bulletin 2020