History
The KazakhGold Group is now controlled by the Assaubayev family who acquired their interest through open tender in 1999. The assets acquired were mothballed at the time, after the previous owner went bankrupt and ownership reverted to the Government.
The operations date back to the early 1930s and the discovery of gold in the Stepnogorsk district of northern Kazakhstan. Three mining complexes were developed to extract high-grade underground ore which was processed using gravity concentration and flotation to recover the gold. Lower grade material, if extracted, was generally dumped on surface.
In the 1950s, the operations were consolidated into a single entity which became one of the country's largest gold producers, with an annual output of around 240,000oz. On break-up of the Soviet Union in 1991 it became an independent enterprise owned by the Kazak Government but ran into serious financial and operating difficulties as the country's economy faltered in the early 1990s. It was privatised in 1996, but the new managers were unable to resolve the problems and the company collapsed into bankruptcy in 1998.
On completion of their acquisition, the Assaubayev family initiated a strategic review of the assets at Aksu, Bestobe and Zholymbet. Production continued during this period, totalling 34,317oz in 2002 and 36,182oz in 2003.
The review showed that the introduction of modern gold treatment processes such as CIP and heap leaching would enable the company to exploit lower-grade near-surface mineralisation by open pit mining and to recover gold from low-grade surface dump material and accumulated tailings. This would be additional to the processing of higher-grade ore extracted from its underground operations. Significantly, the review also indicated that these measures would result in lower cash costs, whilst the final product would be higher value cathodic gold.
The initiation of this restructuring and modernisation programme in 2004 required the partial closure of operations, and gold production fell to 26,272oz that year and only 6,848oz in the first six months of 2005. By September 2005, new treatment facilities had been commissioned at all three mines and open pit mining had commenced at Aksu and Bestobe. Gold production has progressively increased since then, totalling 173,521oz in the first nine months of 2006.
At the end of November 2005, the company completed an IPO and listed on the Main Board of the London Stock Exchange, raising approximately US$97m to complete the modernisation programme. Post-IPO, the Assaubayev family held approximately 71p.c. of the company, since reduced to around 60p.c.
The carbon-in-pulp (CIP) process is relatively new to FSU countries and KazakhGold is only the second company to install the technology in Kazakhstan. It is the most efficient method for processing both oxide and non-refractory sulphide gold ore, with recovery rates typically in excess of 90p.c. Although heap leaching is the lowest-cost treatment process it achieves recoveries of only around 60p.c. in favourable conditions and much lower during the low temperatures of the winter months. Because of this "seasonality" the group has now opted for CIP as its main gold recovery process.
The Group continues to focus on improving both mining and processing efficiencies at its operations, and gold production will be increased until it is better aligned with the Group's large reserve/resource base.