KENTOR GOLD LTD
 
 
   

Andash

Andash Gold-Copper Project (Kentor acquiring 80%)
Towards its goal of becoming a mid-tier gold producer, Kentor plans to develop a substantial gold and copper mine at Andash in the Kyrgyz Republic.

In June 2009, Kentor acquired an option to purchase an 80% interest in the Andash project which became available when the owner, Aurum Mining plc, decided not to proceed due to financial constraints.

Andash is an advanced high grade, low cost gold mining project.  Kentor took advantage of its long established position in the Kyrgyz Republic and its technical and management expertise to grasp this rare opportunity.

The project has an estimated JORC Mining Reserve of 540,000 oz gold and 63,000 tonnes copper, and a Resource of 19.2 million tonnes @ 1.1 g/t gold and 0.4% copper the grades of which rank favourably with comparable gold-copper projects.

The project is almost development-ready, with Government permits obtained and a bankable feasibility study completed by Wardell Armstrong of the UK in 2007.  Based on the study, the Project will have an estimated mine life of eight years at an average annual production rate of approx. 60,000 oz gold and 5,000 tonnes copper.   However, encouraging results from initial exploration near the current Resource indicate the potential for considerable expansion and mine life extension.
The feasibility study points to low costs and high margins.  The low purchase price of US$10 million for the Project equates to US$10/oz gold equivalent, while the cash cost of production equals US$223/oz gold equivalent. 
A low cost open pit mining operation is planned, with a strip ratio of only 0.8:1 waste to ore.  The ore is metallurgically easy to process by simple crushing, grinding and flotation, and a high quality concentrate can be produced.  
The mine is well situated topographically for mining and is well served by infrastructure.   Located in the Talas Valley, it is 280 km by sealed road from the capital, Bishkek, and 45 km from the regional centre, Talas.  The town of Kupre-Bazar is 2.5 km away.  Water is available on site and a major power line passes within 15 km.  The railway is 170 km away by road, providing international rail connections to Europe.

Kentor is exercising a separate option to purchase for a low US$5 million a comprehensive mining and construction fleet assembled by Aurum for the project in the country.

The USD/AUD exchange rate has moved markedly in favour of the Australian dollar during 2009, so that the US$15 million purchase price has been reduced by some A$2.5 million from the time of the signing of the Memorandum of Understanding by Kentor and Aurum in May 2009, to October 2009.

In October 2009, the Government of the Kyrgyz Republic decided not to take up its pre-emptive right to acquire the Andash project.  Kentor subsequently exercised its option to acquire 80% of the project.

The approval of Kentor and Aurum shareholders will now be sought for the acquisition, and Kentor is proceeding to finalise the financing.

Kentor has commissioned the Australian-based international engineering company GRD Minproc to update and optimise the previous study, with a view to improving gold recovery and concentrate grades, and to refresh the capital and operating cost estimates.

Andash Gold Copper Project