Indochina Goldfields expands into Kazakhstan

Newly listed Indochina Goldfields (ING-T) has expanded into Central Asia by acquiring an interest in the Bakyrchik gold mining complex in Kazakhstan.

The company plans to acquire 26.6% (fully diluted) of the outstanding shares and options of Bakyrchik Gold (BKG-L) from four major shareholders, subject to regulatory approval. The key asset involved is a 40% interest in the Bakyrchik gold deposit, which has a known resource of 10.6 million oz.

gold. That project, however, has a troubled history (T.N.M., June 10/96) owing to poor mill recoveries. The operation employs conventional flotation followed by nitric-acid oxidation, though recent metallurgical testing indicates the ore is amenable to conventional roasting technology, with gold recoveries projected at about 90%.

Once completed, the acquisition should provide Indochina Goldfields with a project that is more advanced than any in its current portfolio of exploration and development properties in Southeast Asia. An improved operating performance at Bakyrchik, once realized, would no doubt help Indochina rebound from its disappointing initial public offering. (Introduced at a price of $15 per share, it slipped to less than $10.)

Under the agreement, Indochina Goldfields will acquire 4.8 million common shares of Bakyrchik and options for the purchase of an additional 4.8 million. In exchange, the company will issue 3.5 million common shares valued at $10.30 per share to Bakyrchik.

To finance the Bakyrchik feasibility study, Indochina Goldfields plans to exercise its options, on completion of the agreement, for about $10 million.

The company will also participate in the development of the Vasilkovskoye gold deposit, in which Bakyrchik has a 25% interest. With current estimated minable reserves of 7.7 million oz. gold, Teck (TEK-T) is leading the consortium to develop that project, also situated in Kazakhstan.