Gold output, exploration spending up in Kyrgyzstan

Kyrgyzstan has attracted US$1.7 million in foreign mineral exploration funds and is expected to produce 15 tonnes of gold in 1997.

Much of the financing was provided by the joint-venture partners of state-owned Kyrgyzaltyn, chief among which was Newmont Mining, which invested US$1.1 million in the former Soviet republic. The Denver-based major assumed control of half of the Solton-Sary joint venture when, earlier this year, it acquired Santa Fe Pacific Mining. The joint venture is exploring for gold in the Naryn, Solton-Sary and Karakalinskaya regions.

Another U.S. company, Phelps Dodge, through 50%-owned subsidiary Tien Shan Minerals, spent $153,000 conducting geological studies in the southern region of Osh.

Saskatchewan-based Cameco spent $227,000 exploring in Kyrgyzstan through its 50%-owned subsidiary, Tien Shan Gold, which is exploring the 650-sq.-km Bylakasshinskaya and the 1,760-sq.-km Akdzholskaya prospects.

The country’s mineral potential has also attracted two Japanese companies, which have formed a 3-way partnership with Kyrgyzaltyn. Metals Mining Agency of Japan

and the Japanese International

Co-operation agency have spent a total of US$205,000 exploring the Kichi Sandyk project in western Kyrgyzstan.

Western companies in the region may be looking to the Kumtor gold mine for inspiration. The operation, which is owned jointly by Cameco and Kyrgyzaltyn, is resonsible for boosting national gold production 15 tonnes in 1997 from 2 tonnes last year. As a result, Kyrgyzstan ranks as the third-largest gold producer

in the Commonwealth of Independent States, after Russia and Uzbekistan. And Kyrgyzaltyn expects output to rise to 20 tonnes in the next few years.

However, recent legislation aimed at abolishing tax breaks to foreign mining firms could damage the country’s fledgling mining industry. Kyrgyzaltyn points out that mining demands substantial capital investments with long recovery periods, and that the industry cannot be compared with industrial sectors that provide relatively quicker recoupment of costs.

The legislation has cast in doubt the future of less profitable operations.

The state-owned Makmal project, for example, requires additional capital in order to process its low-grade ore, and may be forced to close if no investors can be found.

— With files from Interfax News Agency.