IFC TO INVEST IN GOLD COMPANY IN KYRGYZ REPUBLIC
L. Joseph
Phone: (202) 473-7700
Fax: (202) 676-0365
WASHINGTON, D.C., July 11 -- The International
Finance Corporation (IFC) will provide a US$40 million financing package
to the Kyrgyz Republic's first private sector mining project being developed
by the Kumtor Gold Company. The Kyrgyz Republic became a member of IFC
in February 1993 and this will be IFC's first investment in the country.
Located in the Dzety Oguz district of the eastern mountainous Issyk-Kol
region of the country, the Kumtor gold deposit is the largest in the world
with geological reserves of about 16.6 million ounces of contained gold.
Of these reserves, 9.3 million ounces have been identified as mineable
by open pit methods at a diluted grade of 3.6 grams per tonne. Gold mining
is one of the most promising areas of economic development in the Kyrgyz
Republic and, potentially, the largest source of export earnings. The mine,
with access roads, power transmission lines, an airstrip to transport the
gold, and other associated infrastructure, will help open up a remote and
inaccessible part of
the country. The project will have a positive developmental impact through
employment and the transfer of management and technical skills. The project
is now under construction and is scheduled to be completed by 1997. Production
of 500,000 ounces per year is anticipated to begin in 1997 with cash operating
costs of about US$160 per ounce. The project will comply with World Bank
environmental guidelines and with national and local environmental laws
and standards. IFC will monitor compliance. "As the largest single
private sector foreign investment in the Kyrgyz Republic to date, this
pioneering project will serve as a powerful incentive to other private
sector investors," said Mr. Azam Alizai, Director of IFC's Oil, Gas,
and Mining Department. The cost of the project is estimated at US$360 million.
IFC will provide a loan of US$30 million of its own funds and US$10 million
in quasi-equity. Loans will also be provided by the European Bank for Reconstruction
and Development (US$30 million), the Export Develop
ment Corporation of Canada (US$50 million) and commercial banks (US$140
million). In addition, the EBRD will provide US$10 million in quasi-equity.
Cameco will invest US$90 million in loans and equity. (More) The Kumtor
Gold Company is two-thirds owned by Kyrgyzaltin, a Kyrgyz state entity,
and one-third owned by the Cameco Corporation of Canada, a uranium and
gold producer. Cameco, which has extensive experience of operating mines
under remote tundra conditions in Saskatchewan, Canada, will provide management
to build and operate the project. Kilborn/Enka, a joint venture between
Kilborn Engineering of Canada and Enka, a Turkish construction group with
experience in the former Soviet States, will be responsible for construction
with AZAT, a Kyrgyz company. IFC is a member of the World Bank Group and
is the largest multilateral source of equity and loan financing for private
sector projects in developing countries.
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