Mine Site

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.

Just before the Organisation of Islamic Conference which is due to take place in Kuala Lumpur in October 2003 a number of Muslim countries, led by Malaysia, propose to introduce an electronic unit of value called a gold dinar to settle bilateral trade among themselves. The plan will be rubbished by members of the Bush administration who were brought up from birth to believe in the power of the almighty dollar, but the White House should reflect on the fact that there are 1.3 billion Muslims in the world and very few of them share America’s view of the dollar. Moreover Asia was developing as an economic power house in its own right until the financial crisis of 1997/8 and many leaders in these countries believe that they were destabilised by an overly strong dollar.

Nor Mohamed Yakcop, the economic adviser to Malaysia’s Prime Minister Mahathir Mohamad, announced the plan to an international conference in the last few days and the intention is to introduce it half way through next year. The idea may be in its infancy at the moment, but as Mao Tse Tung said, “A long journey starts with a single step.” The great appeal, not only in Asia but in the Middle East as well, is that it would offer Islamic countries a means of by- passing western currencies by using gold to settle bilateral trade. All these countries still retain the concept of gold as a store of value as evidenced by Indian wedding rites, purchases of gold by Thai farmers after good harvests and the number of shops selling bullion in Dubai.

America finds it hard to comprehend the resentment in these countries against the sheer power it wields in the world and this is exemplified in the dollar. If the conspiracy theorists are to be believed immense efforts have been made during the 90s by US banks and other institutions to detach gold from the global financial system and spin it off as a barbaric relic. Now the dollar is under pressure and the scales are falling from the eyes of those who put total faith in the paper IOUs of governments. Islam could not have chosen a better moment to offer an alternative currency.

The Malaysian Prime Minister views matters in a fairly simplistic way. Currently most world trade is settled using major currencies. The dollar has predominated and it has been followed by the pound sterling, yen and euro. The economies of the countries of the Middle East and Asia have been vulnerable to the exchange rate between their local currencies and these majors. “The gold dinar could be an important facilitating mechanism to help the smaller countries of the world move away from an inherently unstable and ultimately unjust global monetary system,” he said.

Central to the proposed plan is the requirement that central banks in member countries would settle dinar trade balances every three months by transferring the beneficial ownership of gold held in a custodian bank, such as the Bank of England. These central banks would then settle with exporters and importers in the local currency. According to Islamic law, the dinar is a specific weight of gold equivalent to 4.22 grams of pure gold (0.135 ounces) and its value is based on world demand for gold which would give it a value of US$42 at the moment..

Prime Minister Mahathir’s plan coincided with an announcement from the World Gold Council that Asia’s reserve-rich central banks are potential buyers of gold to diversify their reserve assets. At the moment , according to Ralston Thiedeman, head of the WGC’s Asia Pacific sector, Asia holds over half of the world’s near US$2.0 trillion of foreign exchange reserves and it is mostly held in low-yield U.S. dollar assets, and generally less than five percent in gold. Thiedeman said volatility in global financial markets, a weakening U.S. dollar and low U.S. interest rates were reasons for Asian central banks to diversify their portfolios. He might almost have been reading from the same hymn sheet as Mahathir Mohamad and it might therefore be realistic to suppose that these countries might be gearing up their gold reserves to support the dinar.

One can see the world weary veterans of the derivative markets who thought the bear market in gold would go on for ever shrugging their shoulders at such an idea, but they forget the wild card – China. Its basic industries such as steel are going gangbusters while the western world is in recession and the Bank of China is steadily increasing its gold reserves which still only amount to around 2 per cent of total reserves. Just suppose it decided to hook into the gold dinar idea. The balance of economic power might then shift from the west to the east. Such a move would take time, but it is a thought worth mulling over on the beaches this summer. As the man said, “Post September 11th things will never be the same again.”.

As Minews has pointed out, August is the silly season for news in the northern hemisphere as most of the movers and shakers are off to the beaches or, since last week, shooting grouse on the moors of the north of England and Scotland. The news that the Department of Trade and Industry has decided to charge the first person with insider trading in connection with shares tipped in the Daily Mirror financial columns is therefore of interest as the accused runs a financial PR company which advises a number of junior mining companies listed on AIM.

Step forward Tim Blackstone, an erstwhile scholar at Rugby School where the great game with an oblong ball was invented. Indeed the Media Diary of the Observer newspaper claimed a few months back that he had been invited back to the old school to give a lecture on the fine art of financial public relations. One wonders if any of his audience had brushed up on his past , as described in the said Media Diary, as it included a stint as a porn star and this would have been of much more interest to his listeners than a homile about spin doctoring.

The Sunday papers had a field day with descriptions of this interlude in his career which is said to have been brought about by his lack of luck at the card table with people who had considerably more cash than him. According to those who seem to know he starred in three films, Titus Erectus, I Am Not Feeling Myself Tonight, and The Man With The Golden Arse. He acted in these films, and possibly more, under the pseudonym Dick Bangwell and when he was not performing he was said also to have written a few porn novels. Doubtless this combination kept the wolf from the door and gave him some useful practice in writing as he then moved on to being a financial journalist at the Evening Standard and the Sunday Times.

As far as can be ascertained he started his financial PR operations as a one man band two or three years ago and named it Blackstone Business Communications, doubtless in the hope that simple folk might vest its output with the same importance as that rather larger organisation with the same initials, the British Broadcasting Corporation. The trouble was that the technical expertise of the smaller bbc was not up to that of the larger and it was only in recent months that poor old Tim got round to sending out press releases by e-mail rather than fax.

The great mainstay of his business was the Matt Sutcliffe/Denny Chambers team which left stockbrokers Williams de Broe last year to join what is now called Evolution Beeson Gregory when riding high after a series of successes with Aquarius Platinum, Murchison United and European Diamonds. Since joining the new firm they have also acted in the AIM listings of Dwyka Diamonds and St Barbara Mines. The strange thing was that bbc became financial pr consultant to all these companies without any of its competitors getting a look in, or so they say. As far as can be ascertained it was Denny Chambers who was Blackstone’s patron and Denny himself had a pretty interesting career before catching hold of Sutcliffe’s shirt tails.

Apparently Mr Blackstone’s problems go back to 1999 and focus on the share performance of a company called Murray Financial. The interesting thing is that the DTI is giving this case a high profile as all the Sunday papers were well briefed and were door stepping the offices of bbc when Blackstone arrived there “on a rickety motor scooter “ after being summoned to appear at Marylebone magistrates court to face four charges of contravening Section 52 of the 1993 Criminal Justice Act which forbids insider dealing. The high profile may be something to do with the fact that his sister is Tony Blair’s minister for the arts and revels in the title of Baroness Blackstone given for her services to the Labour Party.

Fortunately for the mining companies involved with bbc – which also include Golden Prospect and Kenmare – Alan Piper and Roger Pope who joined Blackstone in the last year or so are taking the business on under the new banner of First City Financial. Piper has a masters degree in geophysics so should know a fair bit about mining companies, probably more than poor old Tim.