*****PRESS RELEASE ******
fin-info.com
Kazakhstan Minerals: Significant Oil and Gas Investment for KazMinCo Supplements Solid Mineral Assets
VANCOUVER, BRITISH COLUMBIA--Kazakhstan Minerals Corporation
(KazMinCo) is pleased to announce its entry into the oil and gas
business through the acquisition of a 40 percent equity interest
in the Tasbulat Oil Corporation LLP (Tasbulat LLP). Tasbulat LLP
is a Kazakstan registered limited liability partnership which
holds a 100 percent interest in the Tasbulat, Atkas and Turkmenoy
oilfields (Tasbulat Oilfields) located in the Mangystau oil
province of Western Kazakstan (see attached maps). The Tasbulat
Oilfields have an estimated in place oil reserve of 245 million
barrels of which 72 million barrels are classified as recoverable
reserves. KazMinCo's acquisition cost will be comprised of staged
cash payments and two million common shares of KazMinCo. The
transaction is subject to regulatory approval.
Tasbulat LLP was awarded the licences for the Tasbulat Oilfields
in July 1997, following a competitive tender procedure. The main
Tasbulat licence has a duration of 25 years for production and
further exploration. The Atkas and Turkmenoy licences (34 percent
of the total reserves) have been issued as exclusive exploration
licences for which the reserves have been proven and require to be
formally approved by the State Committee of Reserves prior to the
issue of a production licence to Tasbulat LLP. Contracts with the
Government of Kazakstan specifying fiscal conditions for
production together with an agreed development plan for the
Tasbulat field are close to finalisation.
KazMinCo's evaluation of the Tasbulat Oilfields was undertaken in
conjunction with Exploration Consultants Ltd (ECL), an
international oil industry consulting group with several years
experience in Kazakstan. ECL has been retained to advise KazMinCo
on the proposed development alternatives for the Tasbulat
Oilfields and on other potential acquisitions in the oil and gas
sector. Tasbulat LLP is already in discussion with a number of
oil companies regarding the operatorship of the Tasbulat
Oilfields. Initial plans are to restore to production 10 shut-in
wells and to install basic production facilities including a new
seven kilometre pipeline linking to an existing trunk line. ECL
has reported that development drilling, and a workover and
recompletion programme on an additional 20 shut-in wells could
result in production rising from 700,000 barrels in year one
(1,900 bopd) to over 5 million barrels (14,000 bopd) in year
three, peaking at over 9 million barrels annually (25,000 bopd) in
year five.
The Chairman of KazMinCo commented as follows:
"We have had notable success in identifying and acquiring low cost
mineral resources/reserves in Kazakstan. However the world-wide
down turn in investment sentiment for metals and mineral
exploration and development has caused us to re-focus our
investment in the natural resource sector in Kazakstan. As an
adjunct to our business review we have also reduced our overheads
in Kazakstan and in our UK offices.
We have been investigating oil and gas investment opportunities in
Kazakstan for some time. Our existing management, infrastructure
and in-country expertise means we are well positioned to expand
into medium sized proven oilfields, as the Republic of Kazakstan
begins to exploit its immense oil and gas reserves. Our strategy
is to focus on fields with existing infrastructure and known
reserves which offer attractive returns and will result in added
value for our shareholders.
In the third quarter of 1997 we have taken a US$4 million write
off on some of our mineral exploration properties in southern
Kazakstan. In 1998 will concentrate on our advanced mineral
projects at feasibility. We remain confident that our aim of
building a mining business in Kazakstan from known resources is
providing a firm foundation for future growth for our
shareholders. Our oil and gas ventures should provide cash flow
more rapidly than our mineral projects and creates a broadly based
natural resource company focused on Kazakstan. With US$15 million
in the treasury we are well funded and believe we will be
successful in Kazakstan and achieve market recognition in due
course".
The Final Feasibility Study on KazMinCo's 86 percent owned
Varvarinskoye gold/copper project in Northern Kazakstan, with
Bateman Engineering as feasibility engineer, is within budget and
on schedule to be completed in May 1998. The Varvarinskoye
prefeasibility indicated an initial nine year mine life with
production of 120,000 oz. gold equivalent per year at a cash cost
of US$167/oz. (see Press Release May 12, 1997).
At Karaganda in Central Kazakstan, prefeasibility on the Nurkazgan
copper/gold porphyry deposit is close to completion with MRDI of
San Mateo California as independent consultants. KazMinCo has an
88.5 percent interest in the project.
KazMinCo also has interests of between 67 percent and 86 percent
in five mineral exploration joint ventures with a combined land
holding of more than 30,000 sq.km where a number of high quality
exploration targets have been generated for follow-up work in the
1998 field season.
KazMinCo is listed on The Toronto Stock Exchange and its shares,
quoted in US$, trade under the symbol KMC.U.
On Behalf of the Board
Tony Williams, Chairman
Bert Kennedy, President & CEO
A great move for the company - well done Tony and Bert |
