In October 2013, the company announced that it had acquired the technical database on the Karasuyskoye Ore Fields, which is a 198km2 land package adjacent to the Sekisovskoye concessions and processing facilities. The data was acquired from Hydrogeology LLP for US$27.5m and, according to historic work, is highly prospective for both open pit and underground mining opportunities.
In January 2015, the Company was awarded the tender to perform further confirmatory testing in order to gain the subsoil user contract to the Karasuyskoye Ore Fields. The final subsoil contract terms and conditions, including the new financial incentives now offered specifically to the Company through the state programme on forced industrial innovative development (SFIID), have taken longer to finalise than originally anticipated but should be forthcoming in 2016. These additional terms are still expected to include investment incentives and tax reductions.
The geological data that the Company acquired indicates that there are several mineralised zones at Karasuyskoye and this leads the Company to believe that this project has the potential to contain significant gold resources. The Company plans to validate this geological data by twinning previous drill holes and undertaking additional metallurgical test work. This work will facilitate the preparation of a feasibility study and an independent Competent Persons Report (CPR) to international standards in the longer term.
During 2015, the Company performed data validation exercises to confirm the accuracy of the existing geological data. The results obtained did not indicate that the value of the asset as shown in the financial statements should be impaired.
The Karasuyskoye operation is being progressed with a key milestone being reached in May 2016 with the award of the sub-soil contract. The award by Ministry of Investment and Development of Kazakhstan of the contract which runs for six years, will allow the Company to undertake exploration and validation activity in order to submit detailed development plans to the relevant authorities to obtain a sub-soil production contract. A detailed work program has been agreed with the Kazakh authorities in order to meet the detailed requirements to obtain the sub-soil production contract.
On completion of a Competent Persons Report, the Company envisages progressing towards mining from the Karasuyskoye Ore Fields.