KazakhGold JV Wins Gold Plant

24 Nov 2006 07:01

KazakhGold Group Ltd24 November 2006 November 24, 2006 KazakhGold-Oxus Joint Venture Successfully Bids For Transgold Plant And Deposits In Romania • Plant And Related Assets Acquired For US$6.99 Million • New 50:50 Romaltyn JV Set Up To Manage Project • Low Cost High Return Cash Generative Gold Venture KazakhGold Group Limited (London: KZG) announces that, together with AIM-listedOxus Gold, it has successfully bid US$6.99 million (inclusive of US$1.12m VAT)in open auction for the assets of a gold project in Romania that were put intoin liquidation in April, 2005. The newly formed 50:50 joint venture, Romaltyn,expects to recommission the project and bring it back into production inapproximately six months time. The project offers the potential to generaterapid payback on investment and provides an opportunity for exploration anddevelopment of additional resources in the area. The assets include a 2.5mt/yr gold treatment plant, formerly operated byTransgold, a 50:50 joint venture company between Eurogold and Remin, theRomanian state mining company. The plant, located on the outskirts of the townof Baia Mare, ceased operation in 2005 when the tailings line froze andinsufficient funds were available to rectify the problem. Other assets acquired by the Romaltyn JV are the 8.5m tonnes Central Tailingsdump located 7.8km from the plant, together with stockpiled gold-bearing pyriteresources and two exploration tenements, Sophia and June 11, over which 12-monthexploration licences will be re-instated. In a second auction, the two JV companies paid US$300,000 for Explorer SA, acompany in voluntary liquidation which holds three further exploration tenementsin the area, the largest of which, Rascau South East, has a three-yearexploration licence. The Transgold plant was designed and built by Lycopodium for US$28m and has anestimated replacement cost of around US$40m. The JV estimates that it can bebrought back into production after expenditure of approximately US$5.25m onclean-up, minor repairs and the replacement of some equipment. Thus the totalfinancial commitment by the joint venture is estimated to be US$12.54m. Once recommissioned, the plant would treat approximately 2m tonnes of tailingsin the first year. The average recoverable gold grade of this material isestimated at 0.48g/t gold which, at a gold price of US$620/oz, would generaterevenues of US$19m and a healthy operating margin. The auction process on behalf of the joint bidders was led by John Cutler, chiefexecutive of MAED Ltd, the international engineering group specialising in thedesign, construction and operation of process plants for a broad spectrum ofmetals. MAED will be leading the rehabilitation and recommissioning of theTransgold plant before handing over the project to the joint venture managementteam Oxus Gold has been interested in acquiring the Baia Mare plant for some time andhas a thorough understanding of its capabilities. KazakhGold visited the plantin 2002 whilst investigating the possibility of establishing a workingrelationship with Eurogold. Commenting today, Dr Kanat Assaubayev, President of KazakhGold, said: "Althoughthe key focus for the KazakhGold management team is developing the mines at thethree main deposits, Aksu, Bestobet and Zholymbet in Kazakhstan, today'sannouncement represents a small exciting joint venture opportunity which we areconfident will achieve high returns." Further information: Ron Marshman/John GreenhalghCity of London PR LimitedTel: 020-7628-5518 Conference Call Mr Aidar Assaubayev, Deputy Chief Executive of KazakhGold, will be explainingthe rationale behind the bid and answering questions via a conference callfacility arranged for 11.00am London time today. Those wishing to participate should telephone: 00 +44 7162 9962 PIN: 729331# This information is provided by RNS The company news service from the London Stock Exchange