Impasse continues at Zeravshan Gold joint venture

With the assistance of the International Finance Corp. (a division of the World Bank), Nelson Gold (NLG-T) is continuing negotiations with the government of Tajikistan in an attempt to resolve outstanding issues that led to a suspension of operations at their joint-ventured Jilau mine (T.N.M., Nov. 4/96).

The gold mine is operated by Zeravshan Gold, ownership of which, at the time of the suspension, was split between Nelson, with 49%, and the Tajikistani government, with 51%. The suspension of operations and the delay in gold sales forced Nelson to raise additional money for working capital, and, in early October of this year, the IFC purchased a 5% stake from Nelson’s wholly owned subsidiary for US$7.5 million. As a result, Nelson’s stake was reduced to 44%.

Nelson notes that during the third quarter of 1996, milling operations, on a monthly basis, exceeded design capacity of 60,000 tonnes, while plant recoveries were greater than 90%.

Despite the suspension of operations in September, Zeravshan produced 13,008 oz. gold from an average head grade of 3.46 grams gold per tonne.

Zeravshan has an inventory of 27,230 oz. of refined and dore gold that remains unsold; Nelson says this stems from “the inability of the Tajikistani government to implement a protocol agreement” previously signed by the parties. Had the gold been sold, the company adds, operations at Zeravshan would have been profitable.

With no attributable income yet available from mining, Nelson reported a net loss of US$2.6 million for the nine months ended Sept 30, compared with a loss of US$2.1 million for the same period last year. Once the problems with the Tajikistani government are solved, Nelson intends to resume operations and continue expansion plans at Zeravshan. It also intends to continue project evaluation activities in Kazakhstan and Uzbekistan.