12.04.2018

In an interview with Barometr.kg Mikhail Shubin, CEO of Alliance Altyn LLC, told about the company's activities.

He also pointed out that the developer of Jeruy has strictly complied with the terms of the licensing agreement. The State Committee for Industry, Energy and Subsoil Use monitors strict compliance with the agreement.

- Mikhail Aleksandrovich, would you tell us what specific work is being done at the mine now?

- The company began construction in November 2017, on which it has formally notified the state and local community. Today, infrastructure is being built ahead of schedule at Jeruy, which is essential for completing the construction and commissioning of the entire Talas Mining and Processing Plant Complex (as the company is known). I would like to emphasize once again that the Mill is not a separate facility, but a whole complex of buildings and structures that are linked in a single technological chain. Without starting any of these objects, it is impossible to produce gold bars. These facilities vary in construction period, from 2 to 12 months, so there is a schedule of works, which determines the time of completion of the entire complex. The terms of construction are also affected by the timing of technological equipment delivery, which reaches up to 10-12 months from the start of production. Currently, up to 15 contractors and 200 staff members are permanently engaged in the Jeruy.

- What is currently holding back the construction?

- When our company signed the license agreement, Kyrgyzstan allowed parallel construction design, and we planned to build the Jeruy Mill according to these regulations. In November 2016, these norms were abolished, which led to a significant increase in the amount of time required for a detailed design and approval by the state authorities for construction projects. Thus, the project time frame has increased significantly. Our company can' t violate the law and build without issued construction permits.

- According to the terms of the license agreement, you must start the factory in February 2019. Will you make it? Otherwise, the company will have to pay a fine of $100,000 for each overdue month.

- We understand our obligations to the state. And we strictly follow the terms of the license agreement. In case of default, we will pay a fine.

- So as you say, the company had good reasons for delaying the construction of the Mill. Are you going to challenge the terms of the license agreement?

- No, we're not. We work and will work strictly on the basis of these terms and conditions. You should also understand that the State Committee for Industry, Energy and Subsoil Use strictly monitors the fulfillment of each item of the license agreement.

- The construction of the Mill is a complex technological process. Even if you finish the plant, it'll take time to get it up and running. There's very little time left. You're not going to make it!

- Our builders are motivated to accelerate the launch of facilities. We intend to finish the plant in this tight schedule and start processing ore in February 2019.

- But in this case, from an economic point of view, the cost of building the factory will increase?

- You see, the earlier we start the factory, the sooner we get the products and the revenue. It is economically advantageous to launch as early as possible.

- You said that the company strictly complies with the terms of the license agreement. But the media suspect the company of being forgiven a fine by the government, even though the technical project was approved with a delay.

- Let me make it clear. Alliance Altyn obtained a license to develop the Jeruy gold deposit on August 28, 2015. Under the terms of the license agreement, one year from the date of obtaining the license, i.e., August 28, 2016, the company had to coordinate the technical project with the State Committee for Industry, Energy and Subsoil Use as the authorized body. At the same time, paragraph 3.1 of the license agreement provides for the possibility of a one-time extension. In case of violation, after a single extension, the right to use the subsoil would be subject to termination. The company was forced to take the opportunity of an extension, as the procedure of coordinating the document with the state authorities was delayed due to the above-mentioned external circumstances.

Then, no later than three months from the date of approval of the technical design, we were obliged to begin construction of the Mill. If we fail to meet this deadline, as well as if we subsequently fail to meet the deadlines for the commissioning of the Mill and its ramp-up to design capacity, we'll have to pay fines of $100,000 for each month of overdue payments.

- Why did it take officials so long to approve the technical project? Is it related to possible environmental risks during the exploitation of the deposit?

- The document was negotiated in accordance with the laws and regulations in force in the Kyrgyz Republic. We must admit that the one-year period of approval of the technical design, fixed in the license agreement, actually contradicted the requirements of the regulations, so the possibility of a one-time extension was built in. However, the approving authorities understand the degree of responsibility. Any failure in the project can lead to severe consequences, not only ecological but also socio-political. Therefore, it was impossible to speed up the terms by violating the regulations here.

- Did it take a long time to develop the document itself?

- We carefully prepared the document. It's about ecology and other requirements of the local population. In this regard, the company included every item of technical design in the document after an in-depth analysis. After the development of the technical project, a public debate was held, where the local population was presented with the preliminary results of an environmental impact assessment of the mining complex in the region. As a result, the technical design was approved on August 28, 2017.

- Let's get back to the construction of the Mill. How can the government help to get the mine up and running on time?

- We're asking for a step-by-step design law to be passed sooner, so that we can start construction already. We also still haven't completely solved the issues of electricity.

Again, the mine should be operational as early as February 2019. Before that, the company has to complete the construction of the Mill, internal roads, power supply, shift camps, boiler houses, water intakes for drinking and technical water, warehouses, a railroad dead end for cargo unloading, etc.

According to the license agreement, mining will be carried out using the combined method. First we will exploit by open-pit mining, and later we will switch to the underground method of ore extraction.

Provision is made for the so-called dry storage of waste. This is very important because this method is the safest for storing tails, although it's the most expensive to date. Unlike the usual fill type, where water makes up to 80%, which can cause dam failures, our tailings filter up to 20% moisture, which completely eliminates liquid discharges to the terrain and rivers. At the same time, the remaining moisture minimizes the dusting of the tails.

Synopsis:

The Jeruy deposit is located in Talas oblast, 60 km away from the city of Talas. The main road Taraz – Talas – Suusamyr passes 22 km from the deposit, the railway station is 160 km away.

According to the license agreement, after the commissioning of the Mill, the share of foreign specialists shall not exceed 10%, and during the construction of the Mill, taking the contractors and subcontractors into account — shall not exceed 30% of the total number of employees,

As a matter of fact, 92% of the employees of the Alliance Altyn LLC are citizens of Kyrgyzstan.