Not without risk
Reputedly this company is used to weathering Asian storms. So a long wait that has just ended for Centerra Gold TSX:CG in Mongolia must have been borne with patience.
The facility operated from June 2008 to April 2009, when a temporary permit expired. Beginning in December, recommissioning should add around 2,000 gold ounces a month to the mill, which has been processing stockpiled ore since the mine closed in November 2010.
The news shot Centerra’s stock from a September 19 open of $10.40 to a high of $12.08 before closing at $11.95. The $2.75-billion-cap company shows dogged determination in a country where giants tread carefully due to government interference.
The Boroo mill was also intended to handle ore from Gatsuurt, just 55 kilometres away. Centerra was ready to develop an open-pit gold mine there after the Mongolian government approved a feasibility study in March 2008. The following year, however, the government brought in new environmental legislation that blocked the mine.
Last November Centerra VP of Investor Relations John Pearson told ResourceClips, “The site is completely prepared. We have the admin buildings on site, the trucks fleet has been purchased, the road connecting the Gatsuurt mine site to the Boroo mill is complete. Everything is ready to go. Until the government and parliament resolve the issues with that particular piece of legislation, Gatsuurt is currently on hold waiting the final approval.”
According to an estimate completed in December 2010, Gatsuurt has probable reserves of 1.5 million gold ounces, measured and indicated resources of 426,000 ounces and inferred resources of 491,000 ounces. But the company faces greater obstacles at its flagship Kumtor Mine in the Kyrgyz Republic, on China’s western border. Last month Centerra blamed a Q2 loss of $54.6 million largely on Kumtor’s “abnormal mining costs.”
Over the last several months the operation has been hit by an illegal roadblock, a strike and technical problems, as well as government threats to revise its operating licence, change its tax regimen and increase the government’s own interest. The Kyrgyz Republic already holds 33% of the project. Centerra is the country’s largest investor. Yet the company’s ability to overcome challenges hasn’t gone unnoticed. Last June the Financial Post quoted Scotia Capital analyst Trevor Turnbull calling Centerra an “unusual buying opportunity.”
He added, “Centerra is used to weathering political storms, including the 2010 coup d’e"tat, without impact to its Kumtor Mine, which has been in continuous operation since 1997 and a major component of the economy.” Getting back to Mongolia, on September 19 Centerra also announced receipt of a mining licence for its Altan Tsagaan Ovoo Project, 800 kilometres from Boroo.
ATO’s December 2011 resource shows 824,000 gold ounces measured and indicated, and 26,000 inferred. Exploration drilling continues. In other Mongolian news earlier this week, SouthGobi Resources TSX:SGQ announced a management shakeup attributed to high dudgeon on the part of Rio Tinto RIO. SouthGobi President/CEO Alexander Molyneux was dumped in favour of Ross Tromans.
The Anglo-Australian giant apparently expects its new choice to maintain better relations with the Mongolian government. Turquoise Hill Resources TSX:TRQ, the new persona of Ivanhoe Mines, played a role in the shakeup.
On September 4 Turquoise Hill announced cancellation of a deal set up by Ivanhoe founder Robert Friedland just before he left the company last April, after Rio Tinto gained control. Under the agreement, the Aluminum Corporation of China (Chalco) was to acquire Turquoise Hill’s interest in SouthGobi, which now stands at 58%.
Both Turquoise Hill and Chalco expressed a lack of confidence in getting government approval for the deal. Last April Mongolia had threatened to suspend operations at SouthGobi’s Ovoot Tolgoi Coal Mine due to concern about the Chinese company’s takeover. Mongolia considers China an important market but an ambitious neighbour. Rio Tinto owns 51% of Turquoise Hill, which holds a 66% interest in Ovoot Tolgoi’s near-namesake, the Oyu Tolgoi Mine. The Mongolian government holds the remaining 34%.
The world’s largest undeveloped copper-gold project, Oyu Tolgoi shows measured and indicated resources of 41 billion pounds copper and 21 million ounces gold, as well as inferred resources of 41 billion pounds copper and 25 million ounces gold.
Start-up is planned for later this year, with commercial production in Q2 2013. For now, Mongolia—its government and many of its citizens—holds 100% of the country’s second-largest mine, Tavan Tolgoi, one of the world’s largest coking coal deposits. The government has delayed to Q1 2013 plans to put 29% of its stake on the market.
The IPO is expected to bring in $3 billion. Last April the government announced a plan to give citizens free shares totalling 20% of the state-owned company that operates the project. But if that was a pre-election ploy, it failed. In June a new Democratic Party government took office after campaigning on the issue of resource nationalism.
Some Democratic Party members want to take another shot at gaining a majority interest in Oyu Tolgo, after Mongolia backed down on a previous attempt last October. In June, Eric Zurrin, director general of Resource Investment Capital, told the Gold Report, “Mongolia will be one of the key global mining stories for the next 20 years.” He pointed out the country of 2.8 million people has a GDP of just $8 billion, but with foreign investment last year of $5 billion. He said he expects to see real GDP growth of 15% this year. “So as an investment destination, particularly in today’s climate of lower global growth, Mongolia is extremely attractive.”
Source: Resource Clips
The facility operated from June 2008 to April 2009, when a temporary permit expired. Beginning in December, recommissioning should add around 2,000 gold ounces a month to the mill, which has been processing stockpiled ore since the mine closed in November 2010.
The news shot Centerra’s stock from a September 19 open of $10.40 to a high of $12.08 before closing at $11.95. The $2.75-billion-cap company shows dogged determination in a country where giants tread carefully due to government interference.
The Boroo mill was also intended to handle ore from Gatsuurt, just 55 kilometres away. Centerra was ready to develop an open-pit gold mine there after the Mongolian government approved a feasibility study in March 2008. The following year, however, the government brought in new environmental legislation that blocked the mine.
Last November Centerra VP of Investor Relations John Pearson told ResourceClips, “The site is completely prepared. We have the admin buildings on site, the trucks fleet has been purchased, the road connecting the Gatsuurt mine site to the Boroo mill is complete. Everything is ready to go. Until the government and parliament resolve the issues with that particular piece of legislation, Gatsuurt is currently on hold waiting the final approval.”
According to an estimate completed in December 2010, Gatsuurt has probable reserves of 1.5 million gold ounces, measured and indicated resources of 426,000 ounces and inferred resources of 491,000 ounces. But the company faces greater obstacles at its flagship Kumtor Mine in the Kyrgyz Republic, on China’s western border. Last month Centerra blamed a Q2 loss of $54.6 million largely on Kumtor’s “abnormal mining costs.”
Over the last several months the operation has been hit by an illegal roadblock, a strike and technical problems, as well as government threats to revise its operating licence, change its tax regimen and increase the government’s own interest. The Kyrgyz Republic already holds 33% of the project. Centerra is the country’s largest investor. Yet the company’s ability to overcome challenges hasn’t gone unnoticed. Last June the Financial Post quoted Scotia Capital analyst Trevor Turnbull calling Centerra an “unusual buying opportunity.”
He added, “Centerra is used to weathering political storms, including the 2010 coup d’e"tat, without impact to its Kumtor Mine, which has been in continuous operation since 1997 and a major component of the economy.” Getting back to Mongolia, on September 19 Centerra also announced receipt of a mining licence for its Altan Tsagaan Ovoo Project, 800 kilometres from Boroo.
ATO’s December 2011 resource shows 824,000 gold ounces measured and indicated, and 26,000 inferred. Exploration drilling continues. In other Mongolian news earlier this week, SouthGobi Resources TSX:SGQ announced a management shakeup attributed to high dudgeon on the part of Rio Tinto RIO. SouthGobi President/CEO Alexander Molyneux was dumped in favour of Ross Tromans.
The Anglo-Australian giant apparently expects its new choice to maintain better relations with the Mongolian government. Turquoise Hill Resources TSX:TRQ, the new persona of Ivanhoe Mines, played a role in the shakeup.
On September 4 Turquoise Hill announced cancellation of a deal set up by Ivanhoe founder Robert Friedland just before he left the company last April, after Rio Tinto gained control. Under the agreement, the Aluminum Corporation of China (Chalco) was to acquire Turquoise Hill’s interest in SouthGobi, which now stands at 58%.
Both Turquoise Hill and Chalco expressed a lack of confidence in getting government approval for the deal. Last April Mongolia had threatened to suspend operations at SouthGobi’s Ovoot Tolgoi Coal Mine due to concern about the Chinese company’s takeover. Mongolia considers China an important market but an ambitious neighbour. Rio Tinto owns 51% of Turquoise Hill, which holds a 66% interest in Ovoot Tolgoi’s near-namesake, the Oyu Tolgoi Mine. The Mongolian government holds the remaining 34%.
The world’s largest undeveloped copper-gold project, Oyu Tolgoi shows measured and indicated resources of 41 billion pounds copper and 21 million ounces gold, as well as inferred resources of 41 billion pounds copper and 25 million ounces gold.
Start-up is planned for later this year, with commercial production in Q2 2013. For now, Mongolia—its government and many of its citizens—holds 100% of the country’s second-largest mine, Tavan Tolgoi, one of the world’s largest coking coal deposits. The government has delayed to Q1 2013 plans to put 29% of its stake on the market.
The IPO is expected to bring in $3 billion. Last April the government announced a plan to give citizens free shares totalling 20% of the state-owned company that operates the project. But if that was a pre-election ploy, it failed. In June a new Democratic Party government took office after campaigning on the issue of resource nationalism.
Some Democratic Party members want to take another shot at gaining a majority interest in Oyu Tolgo, after Mongolia backed down on a previous attempt last October. In June, Eric Zurrin, director general of Resource Investment Capital, told the Gold Report, “Mongolia will be one of the key global mining stories for the next 20 years.” He pointed out the country of 2.8 million people has a GDP of just $8 billion, but with foreign investment last year of $5 billion. He said he expects to see real GDP growth of 15% this year. “So as an investment destination, particularly in today’s climate of lower global growth, Mongolia is extremely attractive.”
Source: Resource Clips
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