Queenstake options Kazakh copper projects

Toronto-listed Queenstake Resources can acquire an interest in several oxide copper projects in Kazakhstan.

Queenstake can acquire a 100% interest in Resource Development Kazakh (RDK), a Colorado limited partnership which has a 40% stake in a joint venture with a Kazakh government-owned copper-producing company.

The Kazakh company will provide the joint venture with several oxide copper projects, whereas RDK is required to provide technology, project design, management and financing assistance. Each group will provide its share of financing according to the 60-40 partnership.

Queenstake will pay US$1 million in staged amounts to the vendors of RDK, as well as issue up to 1.25 million common shares if it proceeds with the acquisition.

The vendors also retain a sliding-scale net revenue interest to a maximum of US$3 million.

The Kazakh joint venture’s first project will involve constructing a leaching operation using the waste dumps from the Kounrad mine. Situated 9 miles north of Balkhash, the mine has been in production since 1936 and contains an estimated 86.3 million tons of oxide and low-grade dump material averaging 0.204% copper.

A feasibility study by Bateman Engineering estimates that a 10-million-lb.-per-year operation can be constructed at a cost of US$22 million. These estimates are based on a recovery rate of 48% copper and an operating cost of US19.5 cents per lb.

Queenstake plans to use an extendable 60-day due diligence period to advance development of the project through continued discussions and negotiations with potential lenders and engineering firms.

If the company proceeds with the acquisition, production could start as early as spring, 1997, assuming construction begins in the summer of 1996.

Queenstake has $5.3 million in working capital, no debt and 19.9 million shares outstanding.