Kumtor gold deposit is located in Djeti-Oguz region of Issyk-Kul oblast along the north-western slope of Ak-Shiyrak crest at the inner part of Tien Shan mountain range neighboring with China, at elevation of 3700-4500 meters above the sea level. Kumtor gold deposit is one of the unique and the largest gold deposits in the world. In accordance with the recent figures it contains 731 tons of gold reserves.
Kumtor gold ore deposit that was discovered by the Soviet geologists in 1989 was considered commercially nonviable due to complexity of exploitation under the conditions of permafrost.
However, in 1992 in Toronto the Government of the Kyrgyz Republic, Kyrgyzaltyn State Group of Companies, and Canadian Cameco Corporation signed the agreement that provided Cameco Corporation with the exclusive rights for development of the gold deposit. In accordance with this agreement Kumtor Gold Company CJSC was established, founding members of which were Kyrgyzaltyn State Group of Companies on behalf of the Kyrgyz Republic Government and Cameco Mounting Company — subsidiary company of Cameco Corporation. One-third belonged to Cameco Mounting Company and two thirds belonged to Kyrgyzaltyn State Group of Companies.
Management of Kumtor project on behalf of Kumtor Gold Company CJSC is carried out by Kumtor Operating Company CJSC project operator. Kumtor Operating Company CJSC was a 100% subsidiary of Cameco Corporation. Project operator introduced in the process of Kumtor gold deposit development the most recent mine and metallurgic technologies, the most up-to-date methods of production management and the world highest standards in the sphere of environment protection and occupational safety. The global experience and achievements in the sphere of deposits development under the conditions of permafrost are usefully implemented.
Gold beneficiation plant at Kumtor Mine Site located at elevation of 4016 meters above the sea level was brought into operation in 1996. In four months after completion of construction process, the Mill was up and running at its full capacity. The first Kumtor gold bullion was produced on December 31, 1996.
In 1997 commercial exploitation of gold deposit started, gold extraction for the year then ended was 15.6 tons, along the way 1 ton of silver was extracted.
Agreement of 1992 stipulated provision to Kuntor Gold Company CJSC of significant tax incentives for the first five-year operating period, with maintaining of part of incentives for the subsequent period. Dropping in prices for gold, and their low level that took place in 1998-2002 did not allow justifying the expectations of the Kyrgyz side in respect of tax receipts and dividends. The existing situation led to a necessity for searching of the new solutions and carrying out of the new negotiations with investor.
At the end of 2003 the Government of the Kyrgyz Republic and Cameco Corporation signed the agreement about reorganization of Kumtor Project, as a result of which Kumtor Project assets were exchanged for the shares of Centerra Gold Inc. and along with other assets of Cameco Corporation and assets of other shareholders were brought out to the international stock exchange in Toronto. Centerra Gold Inc. is registered at Toronto Stock Exchange -TSX under CG symbol (http://www.centerragold.com), which makes its shares liquid at the world securities market. As a result Kyrgyzaltyn OJSC received in possession 26.8% of a participatory interest.
In consequence of this transaction the Kyrgyz side after sale of part of own shares has received in a lump sum about 80 mln. USD, i.e. more cash receipts than it paid in the form of taxes for the whole preceding period of time. In addition, practically generally accepted tax regime for mining companies was established for the company and Kyrgyzaltyn OJSC became the owner of the rest 15.6% of shares in Centerra Gold Inc.
Centerra Gold Inc. is also registered at Toronto Stock Exchange -TSX under CG symbol, which makes its shares liquid on the world securities market.
Today Kumtor is still staying the main project of Centerra Gold Inc.
In view of the considerable increase of price for gold that has started in 2004 and for the purpose of Kumtor Project efficiency enhancement in 2007 there were initiated new negotiations with Cameco Corporation, which therewith has expressed its intention to sell own assets in gold-mining business and to concentrate on its primary activity – production of uranium raw materials. Negotiations were finished in April 2009, and at the end of 2009 Cameco Corporation sold its shares in Centerra Gold Inc. As a result of the signed Agreements about the New conditions for Kumtor Project that was ratified by Jogorku Kenesh of the Kyrgyz Republic and took the form of law, Kyrgyzaltyn company obtained the additional 43 mln. of Centerra Gold Inc. shares and became its largest shareholder, while owning 33% of shares. With an aid of Agreements the special tax regime was established for Kumtor Project, in accordance with which the company is paying a single tax from gross income at the rate of 13%. Additionally one percent from gross income company is paying to Regional Development Fund of Issyk-Kul oblast.
Kumtor gold deposit is being developed through open-cut mining. Gold beneficiation plant processes about 5-6 mln. tons of ore per year. Over 14-teen years of Kumtor Mine Site operating period, from 1997 and till 2010, Kumtor Gold Company JSC has produced 242.6 tons of gold and 80 tons of silver. Average annual mining efficiency is about 19 tons of gold and 6 tons of silver. Kumtor employs about 2,700 workers. More than 95% of them are the citizens of the Kyrgyz Republic.
In accordance with the long-range development plan mining of pit reserves is assumed to be finished in 2021. At the present moment construction of underground mine and follow-up exploration of Central area reserves from underground mining of deposit deep horizons reserves is taking place. Simultaneously geological exploration works are taking place at other prospecting areas of Kumtor Mine, as well as at adjoining to Kumtor gold deposit prospective geological survey areas.
Gold and silver that is produced at Kumtor Mine Site is procured by Kyrgyzaltyn OJSC for its subsequent processing at Refining Factory (branch of Kyrgyzaltyn OJSC) and sale, in accordance with provisions stipulated in Gold and Silver Sales and Purchase Agreement that was made between (The Kyrgyz Republic Government) Kumtor Operating Company and Kyrgyzaltyn OJSC.
The average annual budget revenue of the Kyrgyz Republic from Kumtor Project is about 10% of GDP of the country.
TALDY-BULAK LEVOBEREZHNYI PROJECT
Taldy-Bulak Levoberezhnyi gold deposit is located in Chui oblast of the Kyrgyz Republic, in 120 km eastwards from Bishkek city and 12 km southwards from Orlovka village in a sub-mountain region of Tien Shan ridge in the north of Kyrgyzstan. In 6 km eastwards from Orlovka village in Kemin village there is a railway station.
Taldy-Bulak Levoberezhnyi gold deposit was discovered in the Soviet period and was an object of numerous geologic investigations over the period between 1963 and 1995 years. During the same period there was conducted a Feasibility Study in accordance with the Soviet model.
During the course of 1995-2001 years the Kyrgyz Republic has engaged various foreign investors for the purpose of joint implementation of Taldy-Bulak Levoberezhnyi Project.
In 1995 Plutonic Resources company has assigned Signet Engineering Pty. Ltd. and JM & EJ Rose Pty Ltd. companies to examine the benefication and underground development projects for the purpose of subsequent preparation of Feasibility Study.
In 1996 Malaysian Mining Corporation Berhard (ММС) assigned the design and construction company SNC-Lavalin to conduct the Feasibility Study with respect to zones М1 and М2 of Taldy-Bulak Levoberezhnyi gold deposit, to evaluate the boring program, to carry out the new tunneling and to facilitate in carrying out of drilling operations. After completion of the designated program of works SNC conducted the Feasibility Study, including calculation of reserves.
On the basis of follow-up exploration works, in 2000 Malaysian Mining Corporation Berhard (ММС) assigned the Minproc Limited to review the Feasibility Study of SNC company with use of the updated geologic model, as well as to revise the technology of enrichment process. In view of the low prices for gold investing company adjudicated bank’s Feasibility Study as unfavourable and refused to finance it.
In 2001-2002 years the project was handed over to Kyrgyzaltyn OJSC, which in its turn assigned the local design and research center Ken-Too to conduct the investment Feasibility Study.
In 2003 for the purpose of carrying out of work with respect to Taldy-Bulak Levoberezhnyi Project Kyrgyzaltyn OJSC jointly with Australian Central Asia Gold Limited (CAGL) company Kyrgyzaltyn OJSC created a Joint Venture Taldy-Bulak Gold Mining Company LLC (TBGMC). САGL company conducted the Feasibility Study for the Bank, which in 2004 was supported in a panel session of a State Reserves Committee under the State Geology Agency.
The total reserves of Taldy-Bulak Levoberezhnyi gold deposit of С1+С2 category, officially accepted by the State Reserves Committee of the Kyrgyz Republic dated 29.06.2004, amount to: gold – 64.4 tons with average grade of 7.23 gr./ton, silver of С2 category – 45.2 tons with average grade of 6.08 gr./ton.
At the end of 2005, due to breach of the License Agreement conditions, license of TBGMC LLC company for the right Taldy-Bulak Levoberezhnyi gold deposit development was revoked. The joint Venture was liquidated. Kyrgyzaltyn OJSC has commenced to searching of the new investors for the purpose of the joint implementation of Taldy-Bulak Levoberezhnyi Project.
In spring 2006 an agreement was signed about the joint-cooperation between Kyrgyzaltyn OJSC (40% of share participation) and Kazakh company Summer Gold LLP (60% of share participation) that was approved by the resolution of the Kyrgyz Republic Government, as a result of which Altynken LLC joint venture was established.
At the beginning of April 2006 State Agency for Geology and Mineral Resources under the Kyrgyz Republic Government has issued license to Altynken LLC for the right of subsurface use for the purpose of its development – 471-АЕ and license for the right of subsurface use for the purpose of geological exploration – 470-АП at Taldy-Bulak Levoberezhnyi gold deposit.
On September 28, 2007 the State Geology Agency made the License Agreement No.2 with Altynken LLC associated with License 471 АЕ for the right of subsoil use for the purpose of Taldy-Bulak Levoberezhnyi gold deposit development and construction of mining and processing combine, with the period of validity till January 5, 2026. Conclusion of this License Agreement confirmed the fact of transition from the stage of searching for design solutions to the stage of the detailed engineering and construction of a mining enterprise.
In 2008 Altynken LLC conducted the Feasibility Study with respect to Taldybulak gold deposit reserves development through the underground approach. However, beginning of the global financial crisis decreased the constructions rate due to absence of acceptable for the project low cost financing.
Nevertheless, in 2008-2009 years construction of ancillary facilities and infrastructure (roads, reconstruction of administration building, electric power supply, water supply, etc.), preparation of areas for accommodation of gold beneficiation plant (Mill), tailings storage facility and main drift conveying and ventilation-transportation slopes were conducted, industrial site for inclined transportation access to Taldybulak gorge was formed, entrances for the main tunnels were erected and their tunneling were commenced (by the end of the year the progress was 200 linear meters), procurement of essential mining equipment was made, staging area for operators of up-to-date tunneling equipment was organized.
The significant slowing down of construction rate raised a concern about nonfulfillment of the License Agreement conditions. As a result of negotiations that were conducted at the end of 2010- in the beginning of 2011 with Altynken LLC company, the new License Agreement was signed, which in its turn allowed to extend the term for placing the mine site into operation – till the beginning of 2014. Therewith investor – Summer Gold LLP company paid out the punitive sanctions in the amount of 5.2 mln. USD.
In August – September 2011 Kazakh investor of the Project with consent of Kyrgyz side sold it’s the participation share in the Project to the Chinese company SuperB Pacific Ltd. (controlling company is Zijin – one of the largest mining companies in China). Kyrgyzaltyn OJSC and SuperB Pacific Ltd. signed the Agreement about transfer of rights and obligations. After completion of receipt and transfer of sites Altynken LLC will proceed with a full-scale construction of mining enterprise.