kyrgyz election emboldens aussie miner to dig

INTERVIEW-Kyrgyz election emboldens Aussie miner to dig gold
6 hours ago by Thomson Reuters
* Kentor gold to start construction of Kyrgyzstan gold mine

* Sees election of new PM as a positive after restive period

* Plans to hire mostly locals to work mine

By James Regan

SYDNEY, Dec 30 (Reuters) - Production from the long-delayed Andash gold mine in Kyrgyzstan will start in about 15 months following the election of a new prime minister who promises to alleviate poverty and restore order in the volatile Central Asian republic, the mine's Australian owner said on Friday.

Kentor Gold plans to employ 450 people, mostly locals, to work the mine at a rate of 70,000 ounces of gold per year starting in early-2013 -- worth more than $108 million at current bullion prices -- the company's managing director, Simon Milroy told Reuters in a telephone interview from Brisbane.

Culturally and economically divided Kyrgyzstan, one of the poorest of the 15 ex-Soviet states, has seen two presidents deposed by violent revolts since 2005 and was rocked by ethnic riots in June 2010, when some 500 people were killed.

In October, a mob on horseback armed with sticks and petrol bombs attacked the Talas Copper Gold exploration camp jointly owned by South Africa's Goldfields and Britain's Orsu Metals, setting fire to buildings and severely beating the security manager as he fled.

Employees of a Chinese-owned miner were beaten in August at a separate development.

Supporters of Kentor's mine have also been threatened, according to Milroy, who helped build gold mines in Thailand and Laos before joining Kentor.

"Last year's revolution put everything on hold as a state of lawlessness existed," Milroy said. "The government has since stepped in and restored law and order in the town where our project lies," Milroy said.

"It will take us 12 months to build it and three months to commission it," Milroy said.

The election of Omurbek Babanov as prime minister on Dec. 23 in a near-unanimous parliamentary vote concluded the process of building a parliamentary democracy in Kyrgyzstan launched after President Kurmanbek Bakiyev was ousted in an April 2010 revolt.

NEW FORMS OF EMPLOYMENT

Until now, the only paid work in the town nearest the mine, called Kopurer Bazaar, was seasonal farm labor dished out by a small handful of landowners, according to Milroy.

But the parliamentary democracy movement had emboldened people to move beyond the feudal-like system and seek out new forms of employment, he said.

"The only thing that's been stopping us has been our lack of confidence that we can go underground and start building a project without getting stopped," Milroy said.

"Babanov's election has been a very positive step forward for us and the country as a whole," he said.

Kentor, which is also exploring for gold elsewhere in Kyrgyzstan as well as in Australia, owns 80 percent of the Andash mine, while the Kyrgyzstan government keeps 20 percent.

"We're very happy to have this way," Milroy said.

Kentor, valued at less than A$130 million, has relied mainly on data compiled by Cold War-era Russian geologists hoping to mine the deposits lining the Great Silk Road -- the route opened by Alexander the Great in the 4th century BC linking Eastern and Western civilizations.

ALEXANDER THE GREAT

The ancient trading cities along the Silk Road have been blighted through the ages by war, occupation, fire and famine. These days, predominantly Muslim Kyrgyzstan finds itself on a drug trafficking route out of Afghanistan.

The only other gold mine in Kyrgyzstan is owned by Canada-based Centerra Gold through its wholly-owned subsidiary Kumtor Gold Co.

It is the largest gold mine project operated by a Western company in the Central Asian region.

Milroy said it will cost about $90 million to construct the Andash mine, little more than twice the amount the company holds in cash.

"We've got about $40 million in the bank and an undrawn debt facility for $50 million with Macquarie Bank for the project." (Editing by Himani Sarkar)

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My mail is that the kurulti was scheduled for this week and hearing these words from Simon Milroy basically tell me that we probably have the all clear. Simon Milroy is very conservative with announcements re Andash so he is probably waiting for i's to be dotted and the t's to be crossed before announcing it to the market IMO.

Sounds like Kentor have a very good relationship with the government. Having the government on side is huge.