LONDON (ResourceInvestor.com) -- London's Alternative Investment Market now hosts a multitude of companies currently producing gold in Russia and the rest of the Former Soviet Union. A number of these outfits have been putting their case this week to investors at the BMO Nesbitt Burns 2005 Global Resources Conference in Tampa, Florida. Resource Investor provides a rundown of the propositions:
Peter Hambro Mining  produced 209,000oz gold from Russia in 2004, and is now targeting annual output of 1moz within the next five years.
The company's primary producing mine is Pokrovskiy, which contributes around 144,000oz of gold per annum from a simple heap leach operation. The company aims to augment this in the near term through the development of its Pioneer deposit, for which it has raised its P category resource estimate to from 1.5moz to 10.2moz over two years. Facilities at Pokrovskiy are also to be significantly upgraded, and the company may choose to combine the two projects and process their output through one large mill at Pokrovskiy. A decision on whether this is to occur is to be taken by the middle of the year, but either way the two projects are estimated to require around $150m of capex, to be funded primarily through project debt.
A longer term project is Tokur in the north east of Russia, a formerly operating mine which has seen its P category resources taken by Peter Hambro from 8moz to 27.8moz since its acquisition last year. A significant upgrade to the mill, as well as the addition of cyanide, flotation, and bio leach facilities is in progress and will act as a pilot plant for future north eastern operations as well as contributing significant production when on stream.
The company's nearby Malomir Flanks, Central Malomir, and Voroshilovskoye deposits are intended to utilise the process being honed at Tokur, but in the meantime are being explored comprehensively. The central part of Malomir was only very recently acquired by the company, but brings with it 1.5moz C2 reserves as well as some silver and PGMs.
Elsewhere in Russia the Yamal Zoloto project was acquired by Peter Hambro in April 2004, and contains an underground deposit of 418,000oz gold at 14g/t. The company now believes the deposit to be exploitable through an open pit method encompassing iron and cobalt credits to lower costs, and is investigating this option further.
The company also has a number of joint ventures. The first of these, Omchak, located in the far north of Russia, credited Peter Hambro with 90,000oz gold last year, and offers good exploration potential for expansion.
Further joint ventures exist in the south of the country; Greenfield exploration with Rio Tinto at Chagoyansk; production with a local alluvial gold operator at Rudnoye, and putative cooperation with Russian miner Polus at Bamskoye.
Celtic Resources  operates gold mines in Russia and Kazakhstan, and has recently concluded strategic agreements with Barrick Gold and with IG Alrosa, the investment vehicle of Russia's second largest diamond producer, SC Alrosa, essentially a quasi government organisation and very useful politically.
Celtic has been consistently in profit since 2001, and is targeting 670,000oz gold per annum within five years at less than $150/oz average operating costs. Celtic boasts a current resource base of 30moz by Russian measures, and 16moz by JORC standards.
The company's two small operating mines, Suzdal and Zherek, are in Kazakhstan and last year produced 31,000oz, while the company's leviathan prospect, Nezhdaninskoye, is located in the far north of Russia and contains 14moz of JORC classified gold resources as well 100moz of silver. More gold undoubtedly exists in the ground but remains un-audited as yet, and in the future Nezhdaninskoye will contribute the lion's share of the company's production. This year's output projection from all three projects is 150,000oz, at a weighted average cash cost of $190/oz.
Suzdal is due an expansion very shortly of production to 100,000oz of gold per annum as a new $30m sulphide processing plant comes on stream, and is also yielding impressive exploration grades from its surrounds.
Nezhdaninskoye is a formerly operating mine with considerable infrastructure and equipment in place, the replacement cost of which has been put at north of $400m. The mine will produce gold again this year, in accordance with Celtic's early cash flow philosophy. Trial production began back in 2002, but a serious dispute with local partners has taken until now to resolve, serving to illustrate the pitfalls that abound in Russia for the unwary. Early stage production of 40,000oz per annum likely to be achieved at a cost of $40m, but to develop the project to full capacity will cost $120m. The likelihood of this funding being obtained is improved by the presence of Barrick, now Celtic's largest shareholder as well as its strategic partner. Barrick has the right to buy in to 50% of Nezhdaninskoye, plus the right to participate in all Celtic's projects in Kazakhstan.
Trans Siberian Gold controls two advanced stage Russian gold projects and possesses company wide resources of 3.7moz gold delineated to JORC standards, a number that is expected to grow substantially through future exploration. The company is aiming for an annual production figure of 260,000oz, and claims the lowest valuation per ounce of gold in the ground of any of its peers.
The Asacha project contains measured, indicated and inferred resources of 677,000oz, while the nearby Rodnikovoye deposit may provide additional feed or be developed alone to tap its 234,000oz resource. Already at Asacha a feasibility study is complete, permitting is well advanced, and basic infrastructure is in place. Production is anticipated by the second half of 2006, at a rate of 100,000oz per annum and at a cash cost of $160/oz. Construction capex has been estimated at $65m, and equipment will be mostly sourced from China, but made to western specifications. The project is close to receiving the final green light, and discussions regarding financing are already underway.
Trans Siberian sees its true 'company maker' at Veduga, where a measured, indicated and inferred resource exists of 2.8moz and remains open ended. A feasibility study has been commissioned and should be completed in early 2006, allowing construction to begin and production of 160,000oz per annum to be attained in 2007 or 2008. Required capex is put at $94m and cash costs at $170/oz, but these are old estimates and will probably rise due to higher energy and steel costs.
Highland Gold  is a company working towards an output of 685,000oz gold in 2009. The company's core producing asset is the MNV mine, which is contributing 195,000oz gold per annum and is being targeted by a cost cutting programme during the coming year.
The company has a cluster of three significant assets, Taseevskoye, Darasun, and Novoshirokinskoye, located in close geographical proximity to each other and close to the Chinese border, allowing it to reap considerable developmental synergies.
Darasun will be the first mine on stream, and full production is expected there in the second half of 2005. Output is projected at 70,000oz gold in 2005 and 120,000oz in 2006 from three separate deposits, the largest of which, Talatui, has seen its resource increased from 289,000oz to 790,700oz during 2004.
Completion of a feasibility study for Novoshirokinskoye is expected in March 2005 and initial mining, milling and concentrate production will commence in the second half of the year from C1 and C2 reserves of 1.8moz. Full capacity will be reached in 2007 after the commissioning of a flash smelter during 2006 that will allow the production of actual metal. Output of 56,000oz gold per annum is projected as well as significant quantities of lead, zinc and silver.
Highland intends Barrick Gold to participate in the development of Taseevskoye, where resource reclassification to JORC standards is currently underway and will be followed by a new feasibility study. Resources presently amount to 4moz measured, indicated and inferred, and a promising satellite deposit of 300,000oz gold in the C1 and C2 reserve categories has just been acquired that will also feed the central mill once constructed.
In the far north east of Russia, Highland is about to complete a feasibility study for the Mayskoye deposit adumbrating a 260,000oz gold per annum operation. The reclassification of resources to JORC standards in progress, as is basic mine construction, and significant exploration potential remains for the future.
The company's finances are on a strong footing after $140m of equity was placed and an $80m bank facility was arranged during 2004. Last year also saw $80m of income from 200,000oz of gold sales.
Absent from the GRC but a significant emerging FSU gold producer nonetheless is Oxus Gold , which has just seen the reinstatement of its Jerooy gold licence in the Kyrgyz Republic.
Jerooy contains a reserve of 2.4 million ounces at 7.5g/t, and production of 180,000oz/yr gold is planned via an open pit and underground operation.
The company is already producing 190,000oz/yr gold at a cash cost of $106/oz through the open pit oxide phase of the Amantaytau mine in Uzbekistan, a 50% joint venture with the Uzbek government. This year should see output at Amantaytau doubled as the underground phase of the project comes on stream and produces gold at a projected cash cost of around $120/oz.
Close to Amantaytau, Oxus has just announced its intention to develop the Kosmanachi silver/gold deposit, which contains a C1 and C2 category reserve of 40moz silver and 270,000oz gold. The company is carrying out confirmatory drilling with a view to a pre feasibility study and the formulation of a production plan that will incorporate the sharing facilities with the Amantaytau operations.
Another company producing gold in the FSU but absent from the GRC is Avocet Mining , which operates the Zeravshan joint venture in Tajikistan. The mine produces around 55,000oz per annum via open pit and underground methods. Avocet is also producing and exploring in Malaysia and Indonesia, and is Asia rather than FSU focused.