GeoProMining to maintain output in 2012, hold off on IPO

Posted on Mar 23, 2012 in GPM in the media

GeoProMining to maintain output in 2012, hold off on IPO

Interfax
23 March 2012

GeoProMining (GPM) plans to maintain production this year at the 2011 level, the company’s senior vice president, Sergei Nossoff said in an interview with Interfax.
GPM reported earlier that it reduced gold production 5.4% to 146,000 ounces in 2011. Copper production fell 3.7% to 12,400 tonnes, but production of antimony in concentrate rose 5.1% to 6,400 tonnes. The company also produced 300 tonnes of associated molybdenum in concentrate and 181 tonnes of silver.

Gold production fell due to the depletion of the group’s deposits in Georgia, Nossoff said. This will be partially offset this year by the growth of production at the Ararat gold recovery plant in Armenia. It will produce about 40,000-45,000 ounces of gold from oxide ore, reserves of which will last another four to five years. Production is expected to increase by 30,000 ounces this year thanks to recovery of metal at a sulfide ore processing facilities, Nossoff said.
Construction of an Albion processing plant to recover gold from refractory ore at the Zod mine, with capacity of 125,000 ounces per year, is expected to be completed in the first half of 2013. A large portion of the $160 million of investment planned for 2012-2013 will be spent on this project.
Asked whether the company would carry out an initial public offering in the foreseeable future, Nossoff said: “We considered the possibility of entering the market, but in terms of market conditions we were not very happy with the position and decided to close this issue. I think that in 2012 we will certainly not do this.”
The company will also probably prefer to first complete the construction of the gold recovery plant, he added.
More than 50% of the company’s revenue is generated by gold and about 30% by copper, and the company intends to grow while approximately maintaining this proportion, Nossoff said.
GPM is currently one of the largest producers of antimony outside of China (China accounts for about 75% of global antimony production). The company plans to develop Sarylakh-Surma and Zvezda, as well as future assets (GPM holds two exploration licenses in Yakutia) in order to move away from the current seasonality of production.
Nossoff said the antimony content of processed ore is currently 14-22%, with 10-34 grams associated gold per tonne. Thanks to the high grade, ore production volumes are low and could be increased, but there is still a problem with logistics, as mining, transportation and processing take place in different seasons. Therefore, one of the options the company is considering is a technological solution to enrich ore onsite so it can transport concentrate instead of ore.
GPM is considering specific plans for construction of a metallurgical plant for antimony, Nossoff said, while refraining from providing details.
GPM, founded by Siman Povarenkin in 2001, is a private mining company with operations in Russia (Sarylakh-Surma and Zvezda gold and antimony mining operations in Yakutia), Armenia (Agarak polymetal complex and precious metals producer GPM Gold), and Georgia (gold miners Quartzite and Madneuli).
GPM’s licenses to the Madneuli and Sakdrisi deposits in Georgia expire in May 2014. A tender for the rights to further develop these deposits was held in February 2012 and won by a company not affiliated with GPM.
“We declined to bid in this auction, as we thought the price for participating in it was inflated and economically unviable,” Nossoff said.
“The infrastructure and plants – Madneuli and Quartzite – stand on our territory. The second deposit, Sakdrisi, which Quartzite is operating until 2014, is 5-6 km from the plant. All the equipment is ours and has nothing to do with the license areas. We have time to find a resource base or reach an agreement with the new resource developers to process their ore. There are various options for our collaboration with them that we are currently considering,” Nossoff said.
He said GMP plans to continue working in Georgia. “We have several ideas that we are now realizing. We can and want to grow in Georgia beyond 2014 and are now taking certain steps for this,” Nossoff said, adding that the company has experience with both M&A and integration of new assets, as will as organic growth.