Alrosa’s Vybornov goes for gold

MOSCOW (Mineweb.com) --The new chief executive of Alrosa, Sergei Vybornov, has authorized the diamond-mining company -- second in the world to De Beers -- to go after gold mines across the Russian border in Kyrgyzstan and Armenia. But officials in Kyrgyzstan have told Mineweb there is no dialogue with Alrosa, and they are not interested in opening one. Also uncertain is whether the cross-border gold pursuit is the policy of Alrosa's new, federally controlled board of directors, and of the Russian government, which appointed Vybornov as the new chief executive a month ago.

In an interview published by Russian wire service Interfax last week, his first since taking office, Vybornov said Alrosa was interested in mining gold in Kyrgyzstan, and was holding talks on the Jerooy mine. Jerooy, in northwestern Kyrgyzstan, between Bishkek and Talas, has estimated mineable resources of 3.2 million troy ounces, and preparations for the start of mining are advanced.

The resource estimate was prepared by London-listed Oxus Gold, which lost its licence to develop the mine in 2004, and was then shut out of the mine site and adjacent properties last October, in a bitter conflict over license violations with the Kyrgyzstan government.

The mine project has been taken over by Jerooyaltyn, a joint venture owned by Global Gold Holding, an Austrian-based company, and the Kyrgyz state gold company Kyrgyzaltyn. This JV, which currently holds the new licence to operate Jerooy, has sued Oxus chief executive Bill Trew for libel in London, and through lawyers Clifford Chance, Oxus has offered to publish a statement retracting and apologizing for the misinformation.

In parallel, arbitration proceedings are under way in The Hague, where Oxus is seeking to challenge what it called, last year, "the government-sponsored illegal occupation last Thursday [October 19, 2006] of premises owned by Talas Gold Mining Company, Oxus' joint venture company at Jerooy." Oxus is demanding about $150 million in losses and damages. Global Gold is backed by the Kyrgyz government, which is claiming losses in tax revenues and related damages of $145 million from Oxus. A first hearing took place in The Hague last November; a second is scheduled for May.

Vybornov has stepped into this minefield without warning. There is no evidence of contact between Alrosa, or Vybornov, with the Kyrgyz government, the Jerooyaltyn JV, or Global Gold, sources in Bishkek and at Global Gold told Mineweb. When asked to clarify his remark, Vybornov's spokesman, Andrei Polyakov said that Alrosa affiliate, Investment Group Alrosa, which Vybornov headed before he moved up to head the parent company last month, "had negotiations about the Jerooy in Kyrgyzstan." A statement issued this week by the Kyrgyz government and the joint venture categorically denies Vybornov's claim. A Bishkek source told Mineweb that Vybornov had attempted to start project talks, but Kyrgyz officials were not interested.

Kyrgyz sources said that, since the licence for Jerooy has been re-awarded, they have no idea why Vybornov would think Alrosa has a part to play in the development. "Vybornov is not connected to the current situation," a Bishkek source said.

Vybornov also claimed in his Interfax interview that he is interested in gold mines in the Congo and Tanzania, but he didn't give details.

At the same time, according to press reports from Armenia sourced from the Armenian government, Alrosa recently acquired the mining licence for the Azatek gold deposit, in the Vayots-Dzorskaya area of Armenia. This had been prospected during the Soviet era, and was reported in the past to hold 13 million tons of gold-bearing ore. No grade or reserve estimate is currently available.

Vybornov said through a spokesman that Azatec has been acquired ""about a year ago", but details were not available of the acquisition through intermediary companies in the British Virgin Islands.

Vybornov also hinted in his interview that he and Alrosa may want to stake a claim to the Zod (also known as Sotk) and Meghradzor gold deposits in Armenia, licences for which are currently held by Sterlite Gold, a fully owned unit of Vedanta Resources; this is a London-listed company controlled by Anil Agarwal. The Armenian government has launched a prosecution of Agarwal's local company, Ararat Gold Recovery Company (AGRC), with the indications from Yerevan that the licence may be revoked.

Agarwal, Vedanta and their London PR agent Finsbury refuse to respond to questions about the conflict with the Armenian government, or the future of the Zod mine. One reason for the sensitivity, Armenian sources told Mineweb, is that talks are under way for Vedanta to sell part of its stake in AGRC to effective local partners. Alrosa has nothing to do with this negotiation, the sources said.

Source : www.mineweb.net