October 15, 1997: Start Of Initial Production At Gold Tailings Project In Kazakhstan
Mark A. Wilson, President & CEO of Goldbelt Resources Ltd. announces that processing of the gold-silver-zinc
tailings at Goldbelt Resources' joint venture in Leninogorsk, Kazakhstan has begun after several months of
negotiations between the joint venture partners resulting in a re-alignment in the ownership/management structure of
the joint venture. The processing will be done under contract with Kazzinc, the successor in interest in the
Leninogorsk Polymetallic Combinant (LPC) zinc concentrator that is adjacent to the tailings.
Goldbelt and LPC hold the mining license for the gold tailings project through its joint venture company Kazgold.
The tailings consist of 102 million tonnes averaging 0.74 g/t gold and 5.71 g/t silver. Also, there is approximately
0.8% zinc in the first 13 million tonnes to be processed. After rejecting plans for processing the tailings through a
large scale stand-alone processing plant, Kazgold has decided to begin processing the tailings on a limited basis of
approximately 30,000 tonnes per month by using the spare capacity of the Kazzinc plant. This will be done without
any capital cost to Kazgold. Mining, processing, and treatment of zinc and gold concentrates will be handled under
contract with local companies using currently available equipment and facilities.
The decision to pursue this initial stage of production as soon as possible resulted from the successful testwork
previously announced (May 14, 1997) which demonstrated the viability of Kazzinc's existing grinding and flotation
circuit for processing the tailings. Kazgold has fixed cost per tonne agreements with Kazzinc for the processing of
the tailings and the refining of gold concentrate. Kazzinc has guaranteed a fixed recovery rate of metals based on the
tailings feed grade. The contracts in place with Kazzinc are through December 31, 1997 subject to renewal following
the first three months' operating performance.
Kazzinc will purchase the zinc concentrate and will deliver gold dore for Kazgold's sale. The first three months of
Kazgold's operations are estimated to produce 2,350 ounces gold, 110,800 ounces of silver and 500,000 pounds of
zinc contained in concentrate. For 1998 and 1999, Kazgold is projected to operate at an annual production rate of
10,600 ounces gold, 65,000 ounces silver, and 2.9 million pounds of zinc.
Kazgold intends to continue this first stage of operation for two years while it seeks financing and constructs a
stand-alone processing plant and gold recovery circuit. At an estimated cost of US$15 million, a 1.2 - 1.5 million
tonne per year plant could be in operation in two years. During this second stage of operation, Kazgold will produce
annually up to 50,000 ounces of gold, 300,000 ounces of silver and 8 million pounds of zinc.
The revised ownership/management structure of Kazgold reflects the two fundamentally separate aspects of the
tailings processing. For the two year period that the tailings are processed on a limited basis through the existing
plant, the operating interest will be split 75% to LPC and 25% to Goldbelt.
LPC will be responsible for managing this processing alternative. For the engineering, construction and initial
operation of the stand-alone plant the operating interest sharing will be 75% to Goldbelt and 25% to LPC with
Goldbelt responsible for the management. LPC may increase its profit sharing to 50% by acquiring an additional
25% interest at book value after two years following Goldbelt's recovery of its capital.
Kazgold has begun operations while applying to the government for an amendment to its previously issued license
for mining the tailings. The original license contained provisions relating to a project of a different scope and an
amendment will be necessary to approve the revised plan. This approval is now delayed as the licensing procedure
was recently amended in Kazakhstan. As of October, responsibility for licensing is handled by the State Review
Committee as opposed to the Ministry of Energy and Natural Resources, Kazgold has decided to proceed with
limited production while awaiting this approval.
TEL: (303) 297-9987 Mark A. Wilson, President & CEO TEL: (800) 738-1746 e-mail: goldbeltmg@aol.com |
