CHINA Nonferrous Gold is on track for first production at the Pakrut Gold Project in Tajikistan during the current quarter. The company, formerly known as Kryso Resources, is targeting completion of the processing plant in September and the smelter in October. This follows delays caused by adverse weather and problems with the company’s plans to import a Chinese labour force.

Preparations at the Pakrut Gold Project, which is three hours by road northeast of the capital of Tajikistan, Dushanbe.

Preparations at the Pakrut Gold Project, which is three hours by road northeast of the capital of Tajikistan, Dushanbe.

Initial production looks set to run at around 1000 tonnes a day, rising to 2000 as the ramp-up of phase one completes at the end of year two, and then rising again to 4000 tonnes per day for the rest of the 19-year mine life.

A bankable feasibility study conducted by SRK Consulting worked off the basis of a 4.7 million ounce resource. Cash costs including depreciation and amortisation were set at US$576 per ounce.

In early September the company awarded the processing and smelting agreement for the Pakrut project to China Nonferrous Hongtoushan Fushun Mining Group Co, Ltd (CNHFMG). The contract is for an 18-month term and was awarded following a competitive tender process. The term represents a two month production preparation period, a four month trial production period and a 12 month production period.

Under the terms, China Nonferrous will pay RMB17.99 (around US$2.80) per gram of finished gold once the 12 month production period begins. Prior to this China Nonferrous will cover the labour and associated costs of CNHFMG.

Once in production, in the event the recovery of the plant is above the Beijing General Research Institute of Mining and Metallurgy forecast rate over the life of production of 82.99%, CNHFMG will share 40% of the profits from the upside directly due to the increased recovery. In the event recovery is below 75%, CNHFMG will bear 20% of any loss incurred by the company from the project due directly to recovery levels.

While Kryso could see the potential of Pakrut, it took the positive attitude of major Chinese resources player China Nonferrous Metals International to unlock the value. This process began in 2010 when an £11 million investment secured it a 30% stake in Kryso.

China Nonferrous Metals now owns more than 38% of the company, a position of influence reflected in the change of name in November 2013 to China Nonferrous Gold. Other Chinese investors also now account for major blocks of Kryso shares, so the transformation into a Chinese majority-owned company is largely complete.

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