Member Info for Daisan

Well, my spellchecker changed 'Jerooy' to 'Merlot' so clearly has a taste for wine.

Merlot is an interesting call and I suspect is certainly on the radar. Chaarat has stipulated their preference for producing or near producing assets. How close is Jerooy to producing? It looks like a decent asset and I have no doubt could be mined pretty profitably. You can see the strategy quite clearly here now that they have gone for Kumtor. Get that producing asset, show the government a model that keeps more of the benefits in Kyrgyzstan and use these assets to pick off the non-performing deposits around the country of which there are several significant ones. Given government backing and finance partners with deep pockets, it is not too hard to imagine the company owning Kumtor, Jerooy AND Chaarat before picking off others. If you are going to do this the best approach would be to develop the low hanging fruit and leaving the big projects until later. So Tulkubash I am sure would be on the agenda to develop early but Kyzyltash would be much later (if ever!). Pick up a low capex, open pit (Jerooy is open pit?) project and it takes precedence. A great model but it does require government backing and partners with deep pockets (at least for the first few years). Having Kumtor would also be extremely desirable!

I believe that the projected production was 5500mtv per annum but that was on the basis of the full development project. If they shipped ore to China, I think it would depend on how much ore is asked for as then it is a much simpler process of digging it out and separating the magnetite.

I don't recall being either aggressive or inflammatory but apologise if this was perceived to be the case. You, however, have referred to posters on here as 'ladies' and sarcastically commented 'dear Daisan' so I think my accusation of you 'beginning to descend into abuse and sarcasm' is well founded. Anyway, I don't want to get into a ****ging match and I think we have both been clear that the deal is good for CGH. In addition, I believe that the deal is good for Krygyzstan as it ensures that most of the benefits remain in the country and there are also benefits for Centerra in receiving cash, removing a geopolitical risk and allowing focus on lower risk jurisdictions. Clearly you do not agree with these aspects.

You are going for rather more than I am expecting. I think about 1mt with contained metal of about $500-800m but the grade should be good. A relatively small but lucrative add on to BKM considering a lot of the infrastructure will already be there. As to the deeper copper zone, it is too early to tell yet whether that is potentially another Beutong. The grades look higher but the widths are less so from what we can see it looks like it has the potential to double the BKM mineralisation if they can confirm that the two zones are indeed connected. It would be great to drill to depth, say 600m, to see whether the mineralisation extends deeper.

Tweet from ARS: https://twitter.com/AsiaMet_Res_ARS/status/991936783968620544 Confirms early May resource statement. In my world this has to be before 16th May! But likely earlier so not long to wait). It is not going to be a huge quantity but it will certainly be high quality. The underlying copper zone will be interesting.

Shakhtar, Certainly not getting defensive. I thought that we were having a discussion. Since you are beginning to descend into abuse and sarcasm to emphasise your points and since I am having difficulty getting you to understand my point, I think that I will stop here.

We've all got to be right at some point. It looks like it was my turn!

I agree the government can make or break the deal. I also feel that the institutions involved can influence the outcome quite strongly. If they convince Centerra that this is worth considering then that is half of the battle as we would be into a negotiation. This would push the government into consideration as well. Considering they hold 26% of Centerra's shares, convincing them would go a fair way to convincing Centerra. Whatever way you look at it (well, bar Shakhtar's way!) the deal actually solves a number of issues rather elegantly. OK, on the face of it, CGH would appear to most likely be the biggest winners but the other stakeholders would also benefit.

I don't think they are manipulated in the sense that organisations like GATA suggest. However, the volumes associated with futures trading are far higher than the physical market so in the short term they tend to dominate the price action. It is daft really - a definite case of the tail wagging the dog. But ultimately the physical market direction is reflected in the price indicated by the futures market.

Pablo2, I don't think that it is daft engaging with anyone as long as they are not abusive and as long as their arguments aren't completely stupid. Whilst they may invest large sums in other projects, the figure of $600m is absolutely related to the existing property. The timescale and sum is just too conveniently satisfied by developments at Tulkubash and Kyzyltash to be anything else and provides them with a relatively low risk strategy for achieving the investment requirement (because you can be sure that the government will make this a requirement of the deal now). It may be that they find other, compelling investment opportunities that they go for but the existing operations are the safety net on this.

Bankside, I think that such was obvious from the first post. His does not seem to have any knowledge of CGH, their executive team or assets and nobody gets that vociferous about a deal in Kyrgyzstan! Nevertheless, I think that it is worthwhile to engage rather than dismissing his views out of hand. After all, he has not been abusive towards us even if he has been somewhat derogatory about Kyrgyzstan's officials.

Shakhtar, I can see how you calculated the percentage of CGH but the calculations is irrelevant to me. Apart from the fact that this ignores CGH's current assets, a stake in CGH is not what is on offer here so there seems little point in progressing the discussion. How CGH fund their cash to buy s 50% stake in Kumtor is surely the business of CGH and not relevant to the government. And nobody is forcing the government to offer their stake in Centerra. If they wish to fund it through debt, should they choose to progress, then that is up to them. Although by your logic we should perhaps be demanding a percentage of Krygyzstan as a result in that case!

shakhtar, Whilst I can understand what you are saying, I don't agree with your conclusions. You need to understand the context of the deal and, I confess, by your posts I suspect that you are not aware of the background. An asset is actually only worth what somebody is willing to pay for it. If other gold companies believe that Kumtor is in play and that the offer seriously undervalues it then you can be sure that they will be all over this. Given its history, I suspect that there are few other companies that can provide what Chaarat can - Kyrgyzstan focus. It is worthwhile remembering that as it is crucial to the argument. Centerra has had a torrid time with Kumtor over the last few years and it is clear from recent communications that, although they have an agreement of sorts with the Kyrgyzstan government, they fully understand that this situation has not gone away forever. Within that context, I suspect that, once they have got over the feeling that the asset is worth more, they will be privately rejoicing that there is the potential to shift the asset at something close to the asset value. In such circumstances I am not sure applying an industry norm valuation method is particularly appropriate. I confess that I have no idea what argument you are making as to why this is a bad deal for Kyrgyzstan. I don't understand where the 79% of CGH comes into it and, anyway, an equity participation in that manner is not on the table, although obviously Kyrgyzstan would be free to participate in the equity raise. Kyrgyzstan would use MOST of their Centerra holding rather than all. Currently that holding is worth US$490m so presumably CGH are suggesting using just over 80% of this to achieve a valuation of US$800m. But the crucial part is how much of the wealth derived from Kumtor actually is retained in Kyrgyzstan. Their argument is not enough. With direct ownership of Kumtor they will more directly benefit from the asset's fcf. I don't think that Chaarat could get away such a large debt offering as it would only be secured on 50% of Kumtor. Any lender is going to want part of this paid for through an equity raise to limit their risk. I am anticipating a raise of between $100m and $200m. You indicate that Chaarat committing to spend US$600m in Kyrgyzstan is just PR. I would suggest that it is more than that as Chaarat's asset is located in Kyrgyzstan and they are committed to bringing this into production. If you look at the capital requirements for bringing both Tulkubash and Kyzyltash into production you will see where the US$600m comes from. Your final remark "It will only succeed if corrupt Kyrgyz officials who support this deal are in on it... or plain stupid" is somewhat unfair.

The Tulkubash drilling is highly promising. An early start on a 30,000m programme involving up to 10 rigs on the ground shows the commitment to really getting this moving. Again the company is pointing the way without explicitly saying it. They are so sure of the continuity that you have to believe that they will likely perform similarly to last year's drilling campaign. That produced 287k oz from 17,800m drilling so I suspect that the company are nudging us towards considering the potential for another 500k oz this year and next with a lesser amount lifted into reserves. Their target would appear to be signposted as a 2m Oz resource and 1m oz reserve to give the 7 year mine life with further expansion into the resource highlighted. Of course this will also 'prove the concept' and give people much more grounds for optimism that the potential of the resource for Tulkubash (the 5-8m oz target I mentioned yesterday) can be realised. Then the market attention can be turned to Kyzyltash and everyone can gulp in appreciation of what might be on offer. All speculation at this stage of course but there is sufficient evidence to suggest that this narrative has, at the very least, some potential to pan out. Interesting and exciting times ahead in the world of Chaarat.

I did a quick look around to see whether there was a comparable company in terms of gold production, potential debt, resources, etc. on the market currently. I was quite surprised when the obvious candidate I looked at, given the geography, was uncannily similar in terms of production, debt, resources and reserves to a Chaarat that included 50% of Kumtor. That company is Highland Gold (HGM). If you look at their KPIs it is very comparable indeed so the market capitalisation may well be an indicator of the shape of things to come should the deal to through. It is likely that there would be as much as twice as many shares in issue, however and that these would create a drag in the short - medium term but there is some reason for optimism should the deal to through.

Actually, the offer for Kumtor is not unreasonable. I was expecting as low as $600m so $800m could be considered a reasonable deal to remove a long term headache. I also suspect that the Kyrgyzstan government will like the deal. Whilst I wouldn't say that I am confident that the deal will go through, now that I have seen the headline figure, I would say that it stands a fair chance of success. The statement also leaves the door open to sweeten the deal further, so don't be surprised with an agreement around $850-900m.

I don't think anyone said it didn't concern us.

Thanks for the info maestro1. You can be sure we will let you know.

They don't take a salary.