So the Moscow Times was right and Trans-Siberian Gold is going to list on AIM in October. The broker and nominated adviser will be Collins Stewart who did a great job with Monterrico Metals and they will be assisted on the technical side by Loeb Aron. As the name suggests Trans-Siberian operates in Russia and acquired a number of projects a couple of years ago in the centre and far east of the country on attractive terms. As a private company it has raised US$12.5 million so far to advance these projects and is hoping to raise around £10 million at the time of listing according to managing director Jocelyn Waller.
After the problems mining companies have been encountering with titles of all sorts there is no doubt that investors will go through the prospectus with a tooth comb. Celtic Resources is now soaring ahead after sorting out its interest in the Nezhdaninskoye mine in Yakutia, but went through a long, dark period of intense legal and political battling to get to this stage. Now Highland Gold finds itself in a problem over the ownership of fixed assets in the Mnogovershinnoe gold mine which is Russia’s fourth largest producer. At the time of the listing questions were asked about title to certain assets, but assurances were given that everything was under control.
Now, more than six months later, a little announcement was put out over RNS that ‘Highland Gold has been in discussions with the Khabarovsk Administration for some time to acquire certain mining assets at the MNV mine, currently leased under a 15 year agreement, signed in 1998 with the Khabarovsk Administration.’ The fact that this minimalist statement was only put on RNS and not distributed as a press release raises concerns with cynical old journos that things are less than rosey. This is a spin tactic and Lord Daresbury, the chairman of Highland Gold, should have stamped on it as soon as it was suggested. Openness is always the best policy.
Doubtless Trans -Siberian will avoid such problems and it is interesting to note that it has no Russian partners in its projects. In Kamchatka, which is a sort of appendix that drops off the far eastern end of Russia towards Japan, the vendors still have a 10 per cent interest in the Asacha project covering 24 sq kms, but Trans-Siberian hopes to get full control at a later date. And it has certainly got 100 per cent of the nearby Rodnikova project to its south. Both are accessible by an all weather road and the Mutnovskoye power station, which attracted US$100 million of funding from the EBRD, sits between them.
Asacha has been explored extensively in Soviet times between 1973 and 1990 with trenching, diamond drilling and underground exploration by means of a 1,120 metre adit along the main vein. Since being acquired by Trans Siberian the resource has been measured to JORC standards and totals 1.74 million ounces of gold in the measured and indicated categories after silver credits and 2.58 million ounces of inferred gold resources. A feasibility study is in progress and the plan is to raise funding to develop an underground mine at Asacha by 2005 as it is on a hill and involves only a simple decline to access the free milling high grade ore. Based on the feasibility study the throughput would be 200,000 tones/year to produce 98,000 ounces of gold equivalent at a cash cost of US$160/oz.. Rodniskoye could then be developed as an open pit ancillary operation later on.
In the Krasnoyarsk region, which is to the north east of Kazakhstan, Trans -Siberian also has full control of the Veduga project where a feasibility for an open pit should be completed next year. The measured and indicated resource is 10.7 million tones grading 4.94 g/t gold to give 1.71 million ounces and metallurgical testing is in progress on the ore which is 52 per cent free gold and 45 per cent refractory. It appears to be amenable to flotation and tests on pressure oxidation have proved positive. This is a bigger project as 1.5 million tonnes of ore would be mined a year to produce just under 190,000 ounces of gold at a cash cost of around US$110/ounce.At a later date it would continue as an underground mine producing around 100,000 ounces of gold a year.
Full details of these projects and of the exploration potential of the ground surrounding them will be available in the prospectus. By that time also the application for the Nyuektaminskoye prospect in Yakutia, the same region in the far east. of Russia that contains Celtic’s Nezhdaninskoye mine, should have been granted. Again it appears that Trans- Siberian is going for full ownership and not a partnership with a Russian entity. Jocelyn Waller argues that there are effectively partnerships with local governments in Krasnoyarsk and Kamchatka through royalty payments, but this is not the same thing as the partnerships formed by peer companies such as Peter Hambro Mining and High River Gold. What Trans -Siberian does have is full control over interesting projects and a team of young Russian managers.
October is going to be a busy month as far as the mining sector of the AIM market is concerned.