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GPM GOLD will begin construction of a processing plant
ArmInfo News Agency's interview with Director General of GPM GOLD
Vladimir Kozlov.
by Arthur Yernjakyan
arminfo
Thursday, March 3, 19:15
GPM GOLD is one of the GeoProMining group of companies, which
operates Sotk gold mine and Ararat gold recovery plant. In 2010-2013
the company plans technical re-equipment of the mine and
reconstruction of Ararat plant. Within the framework of investment
program in the last year GPM GOLD signed a contract with the
Australian Core Resorce and Xtrata companies to introduce innovative
technology "Albion" at Ararat plant.
How was the last year for the company as a whole?
2010 was quite difficult for the company in the sense that upon
completion of the first quarter we had no raw materials. We had to
quickly adjust the plans for the year and the direction of mining
operations. The fact was that we expected more of metal extraction
from ore, but instead of the expected 60-70% we received 30-38%.
Accordingly it had a negative impact on economic performance and once
again convinced the company to accelerate the reconstruction of the
processing plant in Ararat. I would like to note that 70% of the ore
at Sot gold mine is sulfide ore, and the current technology of CIAL is
not designed for its efficient processing. We need to renovate the
plant to increase the rate of extraction and improve the economic
efficiency of mine operation. Despite all, last year we closed with
quite good results, reaching the monthly level of 80 kg of output of
Dore alloy.
Last year was remarkable for the facts that we started to work on the
reconstruction of plant and ordered the project for introduction of
"Albion" technology. Before the end of the last year we signed all
agreements, developed a reconstruction strategy, conducted all
prospecting work for all types of ore and determined the deadline for
a banking feasibility, planned the program for 2011 and starting date
of construction of the plant. In 2011 we should immediately proceed to
the construction works. With regard to the mine, we partially
modernized the equipment - now we operate 130-ton machines, purchased
the first in Armenia a new 10 cube excavator, ancillary equipments,
upgraded in 100% the bulldozer fleet and purchased a new boring rig.
In 2010 we developed the technology of mining of Gabbro ore. This is a
separate massif, which lies on the southern part of the mine. We had
many doubts about its mining, because the ore there is not very rich,
but studies showed that production from this part would be effective.
For this we need to employ methods of preliminary or mechanical
enrichment. In this regard, in late 2010 the project was drafted and
now construction of concrete crushing and sorting complex have already
begun, which enables mechanical separation of ore. By reducing
transportation volumes of ore, Gabromassif will become economically
cost effective. This will be the main focus of mining operations prior
to commissioning of "Albion" technology and the complete
reconstruction of the plant.
How much profit the company expects to receive in 2011?
If all plans for 2011 are successfully implemented, we expect to make
a profit. I would like to note that for a while the production costs
was higher than the market. Very high are the internal transportation
costs, which constitute 30-35% of the total production cost. Sotk mine
is located in 269 kilometers from Ararat plant. These costs can be
compensated only by increase of indicators of metal extraction and
the increase of raw material quality, which is supplied to the plant
for processing.
At what stage is the project of reconstruction of the plant?
In fact, the company's investment program for reconstruction began in
2009, when plans of technical reconstruction were drawn up. In 2010 we
already started to buy mining equipments. Bankable feasibility study
on reconstruction of the plant is fulfilled by 60% and will finally be
ready in May/June of 2011. We will begin construction of the plant in
the Summer. Restoration of the flotation equipments, possibly will
start earlier. Main construction work will begin in late June, early
July of 2011. According to the schedule, in the first quarter of 2013
"Albion" technology will be put into operation.
Originally the sum of investments was known $ 100 million for
reconstruction of the plant, has the cost of the project changed?
Meanwhile we focus on that amount, but it's a rough estimate, because
the final project is not ready. Perhaps the cost will be higher,
because prices for materials and services are constantly growing.
What part of the investment will be made in 2011?
Investments for 2011 total to about $ 10 million. Investments in only
"Albion" project are estimated at $ 4.5 million. In addition to the
construction, major investments will be used to purchase equipment.
Since the time of supply of equipments range from six months to a
year, then we can say that the peak of investments will be in 2012.
Could you tell the expected economic results after the introduction of
"Albion" technology?
We plan to bring the productivity of the mine and plant up to 1
million tonnes of ore per year. This includes mining and processing.
If we talk about amounts of gold production in ounces, then much will
depend on the metal content of ore. Tentatively, the content of mined
ore will be about 4-4,5 gr. metal per ton, since the sulfide ore
bodies are richer than the oxidized ore, on which we work today. In
regard to recovery of sulfide ore, with today's technology it is
28-30%. After the Albion technology is put into operation extraction
from sulphide ore will rise to 80-82%. We see that the investments
will be effective.
What is the payback period of investments?
Now design institutes are considering two options for Sotk mine
operation. Approved gold reserves are now about 120 tons. Method of
mining will be combined, open pit and underground methods. It is
chosen the big pit option and its operation will last 14 years. Ore
reserves are 14-16 million tons. I think that in the coming years it
will be expedient to engage in an open mining, and only then proceed
to underground mining.
Will the company disclose its source of funding?
It is not a secret that the main creditor of the company GeoProMining
is the Russian bank `VTB 24', which allocates funding under the
investment program. Loans are guaranteed by the group of companies
GeoProMining, head office of which is in Moscow.
Is there any environmental component of this project?
The current situation of the ecology is not bad. We follow all the
requirements prescribed by the RA legislation. Monthly independent
monitoring on environmental issues are held in Sotk and Ararat. A lot
of research work have been carried out in this regard. To assess the
environmental component of "Albion" project we have invited
independent experts of a well-known South African company Digby Wells.
They have a very high environmental requirements for "Albion" project.
We will conclude a contract with them to develop norms according to
high environmental standards. The project will undergo all kinds of
expertise, including environmental review.
Will the workplaces increase after modernization?
I must say that in 2010 we have already registered growth by 17,7% due
to increased productivity. In January 2010 the company had 639
employees, and in January 2011 - already 752.
After "Albion" technology is put into operation, the company will have
two new workshops, which will bring about increase of the number of
employees. Most of the jobs have been provided in mine, and about
10-15 new employees were hired to Ararat processing plant.
Is there a motivation for remuneration of labor and does the company
provide social packages?
The year 2010 was a landmark for us in terms of work with the
personnel. In order to increase people's interest in the outcome of
the work, we applied a job-rate-with-bonus system. For the main
specialties at Sotk mine the size of bonuses is not limited. We have
developed indicators for each department and division, under which the
bonuses are paid. For each employee is set a planned target for the
next month, when the 80% of the plan is fulfilled, bonus plan begins.
For each percent of completion two percent bonus is calculated. Plus,
after 100% of the plan over-fulfillment, for each percent we pay 10
percent bonus from one hundred percent. This allows people, at normal
operations, to have a very decent salary. The average monthly wage of
production sector in January 2010 was 136 thousand drams, and at the
end of the year it reached 165 thousand drams.
We conclude contracts on production and health insurance for the
company employees. We are negotiating with Ameriabank on privileged
crediting for our employees. The company is developing strategies to
improve social welfare of its employees.
What social responsibilities does the company bear for the society?
Budget for social investment in 2011 is more than $ 380 thousand. We
plan several serious projects. This is the project of financing of the
culture house, valued at $ 328 thousand, which we carry out with the
Social Investment Fund and Gegharkunik region (marz) within the
framework of strategic partnerships for social development of the
region. In the budget for the current year are also incorporated
several social projects, which we developed jointly with the Embassy
of the Russian Federation in Armenia, as well as with local
authorities of towns Ararat and Vardenis.
From: A. Papazian
ArmInfo News Agency's interview with Director General of GPM GOLD
Vladimir Kozlov.
by Arthur Yernjakyan
arminfo
Thursday, March 3, 19:15
GPM GOLD is one of the GeoProMining group of companies, which
operates Sotk gold mine and Ararat gold recovery plant. In 2010-2013
the company plans technical re-equipment of the mine and
reconstruction of Ararat plant. Within the framework of investment
program in the last year GPM GOLD signed a contract with the
Australian Core Resorce and Xtrata companies to introduce innovative
technology "Albion" at Ararat plant.
How was the last year for the company as a whole?
2010 was quite difficult for the company in the sense that upon
completion of the first quarter we had no raw materials. We had to
quickly adjust the plans for the year and the direction of mining
operations. The fact was that we expected more of metal extraction
from ore, but instead of the expected 60-70% we received 30-38%.
Accordingly it had a negative impact on economic performance and once
again convinced the company to accelerate the reconstruction of the
processing plant in Ararat. I would like to note that 70% of the ore
at Sot gold mine is sulfide ore, and the current technology of CIAL is
not designed for its efficient processing. We need to renovate the
plant to increase the rate of extraction and improve the economic
efficiency of mine operation. Despite all, last year we closed with
quite good results, reaching the monthly level of 80 kg of output of
Dore alloy.
Last year was remarkable for the facts that we started to work on the
reconstruction of plant and ordered the project for introduction of
"Albion" technology. Before the end of the last year we signed all
agreements, developed a reconstruction strategy, conducted all
prospecting work for all types of ore and determined the deadline for
a banking feasibility, planned the program for 2011 and starting date
of construction of the plant. In 2011 we should immediately proceed to
the construction works. With regard to the mine, we partially
modernized the equipment - now we operate 130-ton machines, purchased
the first in Armenia a new 10 cube excavator, ancillary equipments,
upgraded in 100% the bulldozer fleet and purchased a new boring rig.
In 2010 we developed the technology of mining of Gabbro ore. This is a
separate massif, which lies on the southern part of the mine. We had
many doubts about its mining, because the ore there is not very rich,
but studies showed that production from this part would be effective.
For this we need to employ methods of preliminary or mechanical
enrichment. In this regard, in late 2010 the project was drafted and
now construction of concrete crushing and sorting complex have already
begun, which enables mechanical separation of ore. By reducing
transportation volumes of ore, Gabromassif will become economically
cost effective. This will be the main focus of mining operations prior
to commissioning of "Albion" technology and the complete
reconstruction of the plant.
How much profit the company expects to receive in 2011?
If all plans for 2011 are successfully implemented, we expect to make
a profit. I would like to note that for a while the production costs
was higher than the market. Very high are the internal transportation
costs, which constitute 30-35% of the total production cost. Sotk mine
is located in 269 kilometers from Ararat plant. These costs can be
compensated only by increase of indicators of metal extraction and
the increase of raw material quality, which is supplied to the plant
for processing.
At what stage is the project of reconstruction of the plant?
In fact, the company's investment program for reconstruction began in
2009, when plans of technical reconstruction were drawn up. In 2010 we
already started to buy mining equipments. Bankable feasibility study
on reconstruction of the plant is fulfilled by 60% and will finally be
ready in May/June of 2011. We will begin construction of the plant in
the Summer. Restoration of the flotation equipments, possibly will
start earlier. Main construction work will begin in late June, early
July of 2011. According to the schedule, in the first quarter of 2013
"Albion" technology will be put into operation.
Originally the sum of investments was known $ 100 million for
reconstruction of the plant, has the cost of the project changed?
Meanwhile we focus on that amount, but it's a rough estimate, because
the final project is not ready. Perhaps the cost will be higher,
because prices for materials and services are constantly growing.
What part of the investment will be made in 2011?
Investments for 2011 total to about $ 10 million. Investments in only
"Albion" project are estimated at $ 4.5 million. In addition to the
construction, major investments will be used to purchase equipment.
Since the time of supply of equipments range from six months to a
year, then we can say that the peak of investments will be in 2012.
Could you tell the expected economic results after the introduction of
"Albion" technology?
We plan to bring the productivity of the mine and plant up to 1
million tonnes of ore per year. This includes mining and processing.
If we talk about amounts of gold production in ounces, then much will
depend on the metal content of ore. Tentatively, the content of mined
ore will be about 4-4,5 gr. metal per ton, since the sulfide ore
bodies are richer than the oxidized ore, on which we work today. In
regard to recovery of sulfide ore, with today's technology it is
28-30%. After the Albion technology is put into operation extraction
from sulphide ore will rise to 80-82%. We see that the investments
will be effective.
What is the payback period of investments?
Now design institutes are considering two options for Sotk mine
operation. Approved gold reserves are now about 120 tons. Method of
mining will be combined, open pit and underground methods. It is
chosen the big pit option and its operation will last 14 years. Ore
reserves are 14-16 million tons. I think that in the coming years it
will be expedient to engage in an open mining, and only then proceed
to underground mining.
Will the company disclose its source of funding?
It is not a secret that the main creditor of the company GeoProMining
is the Russian bank `VTB 24', which allocates funding under the
investment program. Loans are guaranteed by the group of companies
GeoProMining, head office of which is in Moscow.
Is there any environmental component of this project?
The current situation of the ecology is not bad. We follow all the
requirements prescribed by the RA legislation. Monthly independent
monitoring on environmental issues are held in Sotk and Ararat. A lot
of research work have been carried out in this regard. To assess the
environmental component of "Albion" project we have invited
independent experts of a well-known South African company Digby Wells.
They have a very high environmental requirements for "Albion" project.
We will conclude a contract with them to develop norms according to
high environmental standards. The project will undergo all kinds of
expertise, including environmental review.
Will the workplaces increase after modernization?
I must say that in 2010 we have already registered growth by 17,7% due
to increased productivity. In January 2010 the company had 639
employees, and in January 2011 - already 752.
After "Albion" technology is put into operation, the company will have
two new workshops, which will bring about increase of the number of
employees. Most of the jobs have been provided in mine, and about
10-15 new employees were hired to Ararat processing plant.
Is there a motivation for remuneration of labor and does the company
provide social packages?
The year 2010 was a landmark for us in terms of work with the
personnel. In order to increase people's interest in the outcome of
the work, we applied a job-rate-with-bonus system. For the main
specialties at Sotk mine the size of bonuses is not limited. We have
developed indicators for each department and division, under which the
bonuses are paid. For each employee is set a planned target for the
next month, when the 80% of the plan is fulfilled, bonus plan begins.
For each percent of completion two percent bonus is calculated. Plus,
after 100% of the plan over-fulfillment, for each percent we pay 10
percent bonus from one hundred percent. This allows people, at normal
operations, to have a very decent salary. The average monthly wage of
production sector in January 2010 was 136 thousand drams, and at the
end of the year it reached 165 thousand drams.
We conclude contracts on production and health insurance for the
company employees. We are negotiating with Ameriabank on privileged
crediting for our employees. The company is developing strategies to
improve social welfare of its employees.
What social responsibilities does the company bear for the society?
Budget for social investment in 2011 is more than $ 380 thousand. We
plan several serious projects. This is the project of financing of the
culture house, valued at $ 328 thousand, which we carry out with the
Social Investment Fund and Gegharkunik region (marz) within the
framework of strategic partnerships for social development of the
region. In the budget for the current year are also incorporated
several social projects, which we developed jointly with the Embassy
of the Russian Federation in Armenia, as well as with local
authorities of towns Ararat and Vardenis.
From: A. Papazian