Developing into the leading market in Central Asia by positioning itself as a transit route between China and Europe, Kazakhstan (interested in developing its mining sector) has been progressively developing a transparent and effective business culture to create a less regulated and more market-driven business environment.
The latest World Bank/International Finance Corporation “Doing Business 2013” report reveals remarkable progress achieved by Kazakhstan in creating a business-friendly environment: it ranks 49th out of 185 countries surveyed.
Especially impressive is the country’s improvement in one of the key indicators—ease of starting a business—where Kazakhstan moved from 55th place to 25th in one year. To compare, Russia is ranked 112th, while the closest Central Asian country on the list, Kyrgyzstan, is in 70th place.
• The Kazakh authorities have paid particular attention to this rating; in his 2010 address to the nation, President Nazarbayev called on the government to create conditions for Kazakhstan to enter the ranks of the 50 best business climate economies by 2015, - a goal achieved several years earlier.
• By the way, simplifying the tax payment system and lowering taxes to encourage small and medium business growth moved the country up to number 13th in the world. Meanwhile, Kazakhstan was 27th in enforcing contracts.
The findings of the “Doing Business 2013” report are supported by other studies such as, for example, the 2012–2013 Global Competitiveness Report (GCR) by the World Economic Forum, which puts Kazakhstan in 51st place in the overall rating.
• The findings of the “Doing Business 2013” report attest to the substantial advancement (and significant strides) made by Kazakhstan in creating a favorable legal and operational environment for domestic and foreign investors. As a result, Kazakhstan is ranked 10th in the world in “protecting investors” and 28th in enforcing contracts in the DB report.
• According to the report ”This improvement reflects progress in a number of areas, but most importantly in macroeconomic stability, where the country ranks 16th, and technological readiness, where it advances from 87th to 55th.”
• This dramatic improvement in the business and investor climate is supported by several surveys of investors’ attitudes to doing business in Kazakhstan. One such survey, the 2012 “Kazakhstan: Bridging the Perception Gap Attractiveness Survey” by Ernst & Young, asked the following question: “If you had a chance to reconsider your investment, would you still decide to invest in Kazakhstan?” In answering it, 92 percent of existing investors responded positively.
As an aside, the 2011 World Bank “Doing Business” Report ranked Kazakhstan as the world’s fastest reformer owing to the government’s introduction of the greatest number of pro-business changes during the past year.
As just noted, Kazakhstan is ranked 10th in the world in the category of protecting investors.
• To reach tenth in the world, reforms included regulating the approval of transactions between interested parties and making it easier to sue directors in cases of prejudicial transactions. The previous year, Kazakhstan introduced requirements for greater corporate disclosure in company annual reports.
It is an undeniable fact that large gold companies worldwide (and there are many) are increasingly setting their sights on Kazakhstan as a meaningful ‘strategic target’, eyeing it as representing an important potential ‘geographical imperative’ for the future; so, already up and running with both meaningful resources and production, Alhambra is sitting on a very valuable franchise.
Already producing from a heap leach operation, Uzboy is seeking funding to take the next step and commence major open pit development of its oxide, transitional and primary resources.
At West Uzboy, total Measured and Indicated in-situ resources at a 0.2g/t Au cut off is estimated at 1.24g/t Au for approximately 845,700oz Au.
At East Uzboy, total Measured and Indicated in-situ resources at a 0.2g/t Au cut off are estimated at 0.72g/t Au for approximately 223,300oz Au.
Dombraly (a former producing open pit gold mine) was discovered in 1952, and open cast mining of the deposit from 1985 to 1988 carried out by a small mining cooperative is reported to have produced 140,000 tons of ore grading 6.96 g/t Au, using a 2.5 g/t Au mining cut-off.
- A mechanism already exists at Dombraly to link this shallow gold deposit with a way to capitalize on its intrinsic value (in the form of a well-articulated open pit heap-leach operation); as such, confirming 301,000 ounces of ‘inferred’ current mineral resources at 1.01 g/t, and 22,000 ozs of ‘indicated’ current mineral resources grading 1.22 g/t, this near-surface gold (comprised of a low grade stockpile, pit infill zone, and in-situ structurally controlled mineralization types) constitutes an easily-reached resource to heap leach.
Meanwhile, Shirotnaia enjoys an enormous exploration ‘target area’ of 10 kilometers by 2 kilometers, where a Middle Ordovician volcano-sediment sequence, truncated by Late Ordovician to Devonian intrusions, underlies the prospect.
- Locally, Shirotnaia and the massive world-class Aksu/Quartzite Hills orogenic gold deposits are within the same major flexure of the “Aksu-Balusti Mineral Trend”; where, throughout, gold deposits are genetically and spatially related to granite-like rocks; with the larger gold deposits closely linked to intrusions characterized by multi-stage, complex activity.
- The initial independent National Instrument ("NI") 43-101 gold resource estimate for Shirotnaia was 645,000 ounces ("ozs") of Inferred current mineral resources grading 0.58 grams per tonne gold ("g/t Au") and an additional 71,000 ozs of Indicated current mineral resources at 0.76 g/t Au. Worldwide, undeveloped gold deposits of this size and grade are relatively scarce, and many with similar characteristics are being produced with attractive economic returns using heap leaching and other low cost assets. Someday, this easily-mined bulk tonnage gold deposit is sure to spin off serious cash flow.
The “Dombraly-Shirotnaia gold trend” (60 kilometers in strike length anchored at either end by promising gold deposits where mineralized domains remain open along strike and at depth) is revealing itself as harboring many highly prospective tectonic features.
- Recently completed geophysical surveys (gravity and magnetic) and a remote sensing survey have identified a vast inventory of new potential mineral targets (all part of the same regional framework) to intensify drilling against. Sure, Alhambra is still early on with respect to illuminating the subsurface southeastern flank of its license area; nonetheless, its enormous promise is already apparent; and, going forward, this rapidly emerging ‘significant gold trend’ is likely to be full of many pleasant surprises. For here, at the point of convergence of an immense expanse (where a Middle Ordovician volcano-sediment sequence is truncated by Late Ordovician to Devonian intrusions), mineralization belonging to the volcano-sediment hosted Orogenic style (defined by anticline-syncline inflexions and fluid barriers formed by volcanic rocks covering sediments) is more likely than not to host numerous large gold deposits. Seriously, - exploration activity to date, a mere ‘drop in the bucket’ (for a trend of this size) has been proceeding along very solid lines and is amassing meaningful resources, but the best is still out there.
- Meanwhile, at all three advanced projects, resources are configured dimensionally within the ground in such a manner as to suggest that deeper, extension, and closer-spaced in-fill drilling will disclose significant resources.
- In short, Alhambra offers three advanced projects and its very own ‘gold play’ (the “Dombraly-Shirotnaia gold trend” ); all situated within an ideal physical landscape (flat, without major mountains or rivers to contend with), available power, a good source of water, ready labor, a favorable government fiscal regime, a reasonable corporate income tax rate, and a low royalty fee.
Anyway, there is clearly a great deal of value here.
Over the next few weeks the company is expected to receive roughly $600,000 from gold sales, of which just under a third will be used to pay its auditors (allowing it to file its annual audited financial statements); then, it can set its sights on completing a ‘major financing’ in early June.