Continuation of stable operation of GeoProMining Gold will be the best response to allegations against the company
24.11.2010,
17:43
Interview of the First Vice-President of GeoProMining Group on corporate investments and strategic business development Sergei Nosoff to “ARKA” agency.
- How do you assess the statements by the Chairman of Control Chamber (CC) of Armenia Ishkhan Zakaryan about "illegal exploitation of the deposits and mining of ore by the company without the appropriate licenses in 2004-2008, and bringing to responsibility the competent officials, responsible for monitoring of the situation, as well as his proposal, presented to the Government of Armenia to discuss termination of the operation licenses of GeoProMining Gold for operation of Sotk and Megradzor gold deposits?
S. Nosoff - I have great respect for the Chairman of CC Mr. Zakaryan, and I am very sorry that he had to use unreliable sources of information. It is possible that someone very deliberately misinformed him on this issue.
It seems to me that any issue can better be solved in a civilized way, before it turns into a painful area for the society. Here we play with the fates of people, their job, salary, and this directly affects their families, their standard of living. I think that independent and objective attitude in resolving this issue is simply necessary. At the moment we have prepared to explain all the issues, presented by the Control Chamber, and send them our official responses in relation to their claims, as well as our objections.
- What steps are going to take the Company in connection with the accusations against it?
S. Nosoff - I think we, in the shortest term, will resolve all these questions and further will continue to work in full working mode. Important moment for a long-term partnership is the fact that GeoProMining Group is a financially-stable company, as it is easily seen by the results of annual audits, conducted by the largest international accounting firm KPMG. About the financial stability of the group evidences the fact that the creditor of the Group is the State Russian Bank VTB.
What about the accusations - we do not want to punish anybody, pursue or accuse. We want to continue to do our job, and it will be the best answer to all the accusations against us. Our best response will be the smooth and stable operation, the demonstration of results, modernization and development of the enterprises, as well as improving the lives of those, who are working every day at the “AgarakCMC” and “GeoProMining Gold”.
- What was the mistake of Control Chamber, while stating in the report that the content of gold in a ton of ore was 6 grams? Was this figure overstated?
S. Nosoff - Average grade of ore reserves is highly dependent on cut-off (minimum) grade, which is important for calculating these reserves.
Sotk mine is very interesting and at the same time difficult one, it has a variety of ore bodies with different grades of gold in each of them. For example, there are underground ore bodies with gold grade of 6-8 grams per ton of ore, there are ore bodies with 2-3 grams per ton, and also there are 1-2 grams per ton. Almost all of these ore bodies are refractory, which cannot be processed at our plant.
For processing of this type of ore, we need to change the mining methods from the open to underground mining. In fact, in order to physically reach the rich ore, it needs time and additional investments. Naturally, all these factors are taken into account when planning, creating production and operation plans for the future.
At present the company is processing the existing in a small amount oxide ores of very low grades, sometimes up to 1 gram per ton and less. In addition, the ore is being transported over a long distance. This all is done to support this production and workforce of the company.
We cannot stop the production, release the team and tell everyone that two years no one will do anything, and two years later you will come back to us. This will have negative consequences in the future on the company policies, as well as on social sphere in the country.
To talk about 6 grams of gold per ton, to put it mildly, we are not quite able to. At the moment we are engaged in revaluation of resources by attracting Australian Exploration Company, after which there may be a clear understanding of cut-off grades.
To say that the average content of all the Sotk ore is 6 grams, and what happens to gold, to my opinion, is absolutely wrong. This is a very complicated issue, because there cannot be a clear answer. There are ores, which lie at the bottom, there ore ores lying on top and at the bottom the grade can be very high and rich. But when the occurrence of ore goes down for miles, it needs to be reached. In this situation to think that the average grade of gold is 6 grams, I think, is wrong.
- Among the many accusations of Control, Chamber is the one that the company still does not have a license agreement to operate Sotk and Megradzor gold deposits, and that the reserves have not been reconfirmed. Is it possible, how have you worked so far?
S. Nosoff - We have worked and are working with license agreements, entered into force on February 29, 2008, valid till 2023. In response to statements of the Control Chamber, that these contracts are not subject to re-registration, as far as to their experts, they should have known, since those contracts were made after 1 July 2004. Naturally, we cannot operate without license agreements.
- The company has repeatedly announced about its social responsibility. In gold mining in Armenia are employed 600 people. What are their working conditions, wages, and what manifests social responsibility. Are there any delays in salary payments?
S. Nosoff- Delays in salary do not happen. Working conditions for workers are optimal for the present state of affairs in the enterprise, and wages are constantly rising. People have permanent jobs and prospects for the future, unlike their colleagues in many countries around the world.
I would like also to remind you that upon obtaining of GPM Gold, our company had paid nearly nine-month salary arrears, and then paid monthly salaries during the entire period of inactivity until the start of production. In this regard, we always behave correctly.
- Tell me, if the company performs all its obligations against the budget of Armenia on tax and concession fees?
S. Nosoff - We perform all our obligations against Armenia, and there are no problems or misunderstandings on this issues.
- Does the State perform its obligations against the company for refund of value added tax? It is not a secret that it is a subject matter for all exporters, especially for mining companies?
S. Nosoff - All the obligations against the company are being fully performed.-0-
S. Nosoff - I have great respect for the Chairman of CC Mr. Zakaryan, and I am very sorry that he had to use unreliable sources of information. It is possible that someone very deliberately misinformed him on this issue.
It seems to me that any issue can better be solved in a civilized way, before it turns into a painful area for the society. Here we play with the fates of people, their job, salary, and this directly affects their families, their standard of living. I think that independent and objective attitude in resolving this issue is simply necessary. At the moment we have prepared to explain all the issues, presented by the Control Chamber, and send them our official responses in relation to their claims, as well as our objections.
- What steps are going to take the Company in connection with the accusations against it?
S. Nosoff - I think we, in the shortest term, will resolve all these questions and further will continue to work in full working mode. Important moment for a long-term partnership is the fact that GeoProMining Group is a financially-stable company, as it is easily seen by the results of annual audits, conducted by the largest international accounting firm KPMG. About the financial stability of the group evidences the fact that the creditor of the Group is the State Russian Bank VTB.
What about the accusations - we do not want to punish anybody, pursue or accuse. We want to continue to do our job, and it will be the best answer to all the accusations against us. Our best response will be the smooth and stable operation, the demonstration of results, modernization and development of the enterprises, as well as improving the lives of those, who are working every day at the “AgarakCMC” and “GeoProMining Gold”.
- What was the mistake of Control Chamber, while stating in the report that the content of gold in a ton of ore was 6 grams? Was this figure overstated?
S. Nosoff - Average grade of ore reserves is highly dependent on cut-off (minimum) grade, which is important for calculating these reserves.
Sotk mine is very interesting and at the same time difficult one, it has a variety of ore bodies with different grades of gold in each of them. For example, there are underground ore bodies with gold grade of 6-8 grams per ton of ore, there are ore bodies with 2-3 grams per ton, and also there are 1-2 grams per ton. Almost all of these ore bodies are refractory, which cannot be processed at our plant.
For processing of this type of ore, we need to change the mining methods from the open to underground mining. In fact, in order to physically reach the rich ore, it needs time and additional investments. Naturally, all these factors are taken into account when planning, creating production and operation plans for the future.
At present the company is processing the existing in a small amount oxide ores of very low grades, sometimes up to 1 gram per ton and less. In addition, the ore is being transported over a long distance. This all is done to support this production and workforce of the company.
We cannot stop the production, release the team and tell everyone that two years no one will do anything, and two years later you will come back to us. This will have negative consequences in the future on the company policies, as well as on social sphere in the country.
To talk about 6 grams of gold per ton, to put it mildly, we are not quite able to. At the moment we are engaged in revaluation of resources by attracting Australian Exploration Company, after which there may be a clear understanding of cut-off grades.
To say that the average content of all the Sotk ore is 6 grams, and what happens to gold, to my opinion, is absolutely wrong. This is a very complicated issue, because there cannot be a clear answer. There are ores, which lie at the bottom, there ore ores lying on top and at the bottom the grade can be very high and rich. But when the occurrence of ore goes down for miles, it needs to be reached. In this situation to think that the average grade of gold is 6 grams, I think, is wrong.
- Among the many accusations of Control, Chamber is the one that the company still does not have a license agreement to operate Sotk and Megradzor gold deposits, and that the reserves have not been reconfirmed. Is it possible, how have you worked so far?
S. Nosoff - We have worked and are working with license agreements, entered into force on February 29, 2008, valid till 2023. In response to statements of the Control Chamber, that these contracts are not subject to re-registration, as far as to their experts, they should have known, since those contracts were made after 1 July 2004. Naturally, we cannot operate without license agreements.
- The company has repeatedly announced about its social responsibility. In gold mining in Armenia are employed 600 people. What are their working conditions, wages, and what manifests social responsibility. Are there any delays in salary payments?
S. Nosoff- Delays in salary do not happen. Working conditions for workers are optimal for the present state of affairs in the enterprise, and wages are constantly rising. People have permanent jobs and prospects for the future, unlike their colleagues in many countries around the world.
I would like also to remind you that upon obtaining of GPM Gold, our company had paid nearly nine-month salary arrears, and then paid monthly salaries during the entire period of inactivity until the start of production. In this regard, we always behave correctly.
- Tell me, if the company performs all its obligations against the budget of Armenia on tax and concession fees?
S. Nosoff - We perform all our obligations against Armenia, and there are no problems or misunderstandings on this issues.
- Does the State perform its obligations against the company for refund of value added tax? It is not a secret that it is a subject matter for all exporters, especially for mining companies?
S. Nosoff - All the obligations against the company are being fully performed.-0-
