Cameco denies problems with Kyrgyzstan project

Confusion over the $270-million Kumto gold deposit in the mountains of Eastern Kyrgyzstan has come to the attention of The Northern Miner.

The Parliamentary Speaker for the former western Soviet republic has suggested that the $270-million deposit be put up for bid and yet Cameco (TSE) already has an agreement with the government regarding the deposit. The official call for tender contravenes this contract.

When contacted by The Northern Miner, a Cameco spokesman said such reports surface from time to time and that they are largely outdated and exaggerated. Said Rita Mirwald: “Right now, things look as good as ever. We are hopeful that when the Kyrgyzstan Parliament starts its new session, our feasibility study will be accepted.”

Cameco became involved in the project late in 1992 when it formed a joint venture with state-owned Kyrgyz Altan. Cameco can earn a one-third equity interest in Kumtor Gold, the joint venture, by investing the first $US45 million in the project’s development. The total cost of developing the project is estimated at US$300-330 million.

Cameco spent $10 million completing a feasibility study which suggested that Kumto holds about 200 tonnes, or 16.8 million oz., of recoverable gold grading 0.12 oz. per ton. The study concluded the deposit could support an open-pit mine with an annual production rate of 500,000 oz. The mine life would be about 11 years.

The study was submitted to the government this past January and it was about this time that the Speaker of Parliament’s remarks were made. Cameco had hoped approval to mine the deposit would be granted to the joint venture last month.

According to newspaper reports, the government also suggested Cameco should complete a feasibility study on other deposits that may lie beneath the proposed pit. This second study is estimated to cost US$4 million. Mirwald suggested that while the technical skill of the local staff was very high, the concept of mining for profit was new to the Kyrgyzstan government. She added that “the feasibility study has been completed on economic mineralization.”

Meanwhile, Cameco is facing difficulties with the government over the issue of taxation. The company had hoped for two consecutive 5-year taxation holidays, but the government of Kyrgyzstan is only willing to offer one 5-year period.

Despite these obstacles, Cameco’s directors believe solutions can be found. The final decision rests with Parliament and a satisfactory financing package.