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Kryso gets Pakrut gold project mining license from Tajik government

AIM listed junior gold developer, Kryso Resources, has received its mining license for its Pakrut gold project from the Tajikistan government and can now proceed with underground mine development.

Author: Lawrence Williams
Posted:  Monday , 09 Jan 2012 

LONDON - 

After a long period proving up its Pakrut gold project in north eastern Tajikistan, AIM listed Kryso Resources (ticker: KYS) has now received a mining license for the project which would be an underground mining operation.  Company Managing Director, Craig Brown, says that Kryso hopes to be able to complete financing and proceed with full mine construction over the next 2-3 months.

The Pakrut Licence Area is located within the Tien-Shan Fold Belt, which stretches from Uzbekistan through to China and Mongolia and is said to contain the world's second largest known gold resources after the Witwatersrand in South Africa.

Pakrut approved reserves - on which the mining licence was issued - are put at a total of 1,257,454 oz gold at a cut off grade of 0.5 g/t (under the Russian classification system). (Under the JORC code, Measured and Indicated resources at the 0.5 g/t cutoff are put at 21.8 million tonnes at 2.4 g/t gold and 0.72 g/t silver for a contained 1,687,000 ounces of gold.)

An earlier bankable feasibility study on the Pakrut Gold deposit was completed by the Beijing General Research Institute of Mining & Metallurgy (BGRIMM). In completing the Pakrut project BFS, BGRIMM built on work previously completed by other consultants to Kryso including GeoLogix Mineral Resource Consultants (resources), GBM Minerals Engineering Consultants (metallurgical test work review and preliminary process design), Prime Resources (social and environmental), Scott Wilson Group (tailings dam design), SGS Group (metallurgical test work) and Turgis Mining Consultants (mining and infrastructure).  According to the BFS, project payback would be only 2.7 years at a gold price of $1,250 an ounce.  At current gold prices this should be even faster.

There is considerable further gold potential within three additional mineralized systems within five kilometres of the main Pakrut gold deposit. These are the Eastern Pakrut gold deposit, the Sulfidnoye gold and silver prospect and the Rufigar prospect which suggest that, assuming things run smoothly in a largely untested political environment as far as foreign-controlled mining companies are concerned, that Kryso, or a successor, could be mining in the area well beyond the initial Pakrut mine life.

In terms of relations with the Tajik government, Kryso's Chinese partner, China Nonferrous Metals International Mining Co Ltd, which holds 27% directly and another 73 million warrants exercisable at 21p a share, may prove to be a significant help. In addition, as part of its work to secure the mining license, Kryso issued 8.3 million shares to a local Tajik consulting company, Anbat Service, presumably to smooth dealings with the Tajik government. Total no. of shares in issue, according to the Kryso website -  is 267.2 million.

As London broker, Collins Stewart, has pointed out in a brief analysis of the project, underground mining in Tajikistan, where mining skills are lacking, could prove to be a major challenge for the company.

In its statement on the granting of the mining license, Kryso stated that "According to the terms of the licence, the amount of ore that can be mined is variable depending upon the mine plan. The plan submitted by Kryso envisages an initial processing capacity of 660,000 tons of ore per annum, increasing to 1,320,000 tons per annum from 2017. The mining licence is valid until 2 November 2030."  Initial gold output for the first four years has previously been put by the company at some 82,000 oz/year and total capital cost at $US 108 million.

The company also says it has started work on some key construction elements - notably on the access road and tailings dam and construction equipment has been ordered.  The time taken to bring the mine on stream will depend very much on the construction schedule and with the major Chinese involvement this may well be progressed faster than might be achieved for Western mining projects.

Monday, January 18, 2010 Fox-Davies ups Kryso Resources target price to £0.28 (0,32 € ) Fox-Davies Capital has upped its target price for Tajikistan operating gold explorer Kryso Resources (AIM: KYS) to £0.28 from £0.25, as a result of higher gold prices and a weaker sterling exchange rate. The upgraded outlook comes notwithstanding the delay to the Pakrut bankable feasibility study, wich was announced in December. Kryso shares climbed approximately 4% this morning to change hands at £0.1325 per share. The delivery of the feasibility study was put back as the project’s JORC-compliant resource update, which lifted the total resource by 43%, to 2.83 million ounces of gold, fell behind schedule. The resource update was completed in November and the feasibility study is expected to be completed in the early part of 2010. The Pakrut gold project sits at the centre of a large licence area of some 6,300 hectares, alongside a number of other smaller mineralised systems, and astride the gold-prolific southern Tien Shan mineralised belt. It is approximately 112km northeast of the Tajik capital city Dushanbe. According to November’s resource update, Pakrut’s total resource includes 1.33 million ounces of indicated and measured resource at an average grade of 2.44 grams per tonne with a further 1.5 million ounces in the inferred category. A further update to the resource is expected to be completed in the first half of 2010. http://www.proactiveinvestors.co.uk/companies/news/12301/fox-davies-ups-kryso-resources-target-price-to-028-12301.html

Kryso Resources* (AIM: KYS), mkt cap of £17m. Its Pakrut Gold project based in Tajikistan contains 2.83Moz JORC compliant resources. Previously touted as an open pit proposition, """ following a recent site visit, we believe that the potential of this stock is seriously misunderstood by the market.""" It appears that Zones 1 and 2 are opening up at depth as well as increasingly materially in grade. Together with the nearby prospective Zone 7, this deposit clearly has the potential to be a large tonnage, relatively modest-grade, low-cost underground operation, with the potential to double existing resources. http://www.minesite.com/fileadmin/content/pdfs/Brokers_Notes_Jan_10/Mining%20Corner%20January%202010.pdf