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Gold/Mining/Energy : ECHARTERS -- Ignore unavailable to you. Want to Upgrade?

To: E. Charters who wrote (1934)	12/5/1997 2:56:00 PM
From: John Menzies	Read Replies (2) \| Respond to of 3744

STEPPE GOLD IN KAZAKSTAN These results certainly engender some hunility on the part of us geologists who have been quietly out there getting all excited about a 5 metre wide massive sulphide zone. I remember the first time I drilled a VMS and get a 5 metre intercept of 3% copper and 5% zinc - WOW this was wonderful. Country perception - note I have not used the word risk. We have been operating there for a considerable period of time and have 55 staff full time in country most of whom have been with us for nearly three years. The ratio of expats is very low (2 full time in fact) which reflects the remarkably high skill base of the L local professionals. The constitution of the company's workforce in Kazakstan has the effect that we operate as a local company with a unique understanding of the local political and social fabric. Also important to operating in a developing country is to produce results and take on projects which have a readily achievable outcome. It is very important to be truthful with governement and live up to your promises. Our experience and that of most other companies operating in the region has been that the governement at all levels is most willing to help the right companies develop the mineral assets which offer so much promise in the region. The oil and gas companies have had a wonderful outcome and continued investment depends more on the availablility of pipelines rather than any other factor. Foreign banks are developing businesses in the region and asian companies are rapidly expanding into all aspects of the economy. We are very comfortable working exclusively in Kazakstan. We are more than happy with our staff (I can not over emphasise this), we are very happy with the governement at all levels and the mineral potential is immense. We operate within the framework of governement, in the longer term our participation in the industry will change not only the attitude but also the legislation and regulatory process - but we are patient and out current focus is development of the gold assets of the company and the development through joint venture participation of the large copper deposits. Ourrules for success in any foreign country (note I did not say developing) are: Patience - work within the legislative environment and get to understand it Be prepared to build a company over a period of time with a very large prooprtion of the very best lcoal staff Do not expect immediate return or even an immediate deal flow Live up to your promises abd remember only politicians can blur the boundaries between promise and promotional hype- assume that you will be called to account at some time. We will not take on advanced projects already developed in any country - we do not have the resources to manage the problems - which is all they really are - developed projects are not opportunities for smaller companies they are a death sentence!!! We will only develop projects after exhaustive study and completion of feasisibility and environmental studies to a standard suitable for independent audit and project finance. If the project can not sustain project finance rather than equity it is most unlikely that we would consider development. If the project and its cashflows do not satisfy the banking covenants and guidelines it is a pretty clealr indication that the project is not suitable for a smaller company. I am not sure if the above answers your question. I really like Kazakstan - I like the terrain- I like the people and there are some very capable people in governement who inspire respect. I like the geolgoical potential and the project development risk profile is far better than the current stock market perception. Major companies like the country, the banks want to do business here, the country and political risk insurers do not rate the country as challenging but the market has a different view - all are clearly correct who am I to argue - but someone has to change their mind and I will go with money any day.