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WASHINGTON, D.C., July 11 -- The International Finance Corporation (IFC) will provide a US$40 million financing package to the Kyrgyz Republic's first private sector mining project being developed by the Kumtor Gold Company. The Kyrgyz Republic became a member of IFC in February 1993 and this will be IFC's first investment in the country. Located in the Dzety Oguz district of the eastern mountainous Issyk-Kol region of the country, the Kumtor gold deposit is the largest in the world with geological reserves of about 16.6 million ounces of contained gold. Of these reserves, 9.3 million ounces have been identified as mineable by open pit methods at a diluted grade of 3.6 grams per tonne. Gold mining is one of the most promising areas of economic development in the Kyrgyz Republic and, potentially, the largest source of export earnings. The mine, with access roads, power transmission lines, an airstrip to transport the gold, and other associated infrastructure, will help open up a remote and inaccessible part of
the country. The project will have a positive developmental impact through employment and the transfer of management and technical skills. The project is now under construction and is scheduled to be completed by 1997. Production of 500,000 ounces per year is anticipated to begin in 1997 with cash operating costs of about US$160 per ounce. The project will comply with World Bank environmental guidelines and with national and local environmental laws and standards. IFC will monitor compliance. "As the largest single private sector foreign investment in the Kyrgyz Republic to date, this pioneering project will serve as a powerful incentive to other private sector investors," said Mr. Azam Alizai, Director of IFC's Oil, Gas, and Mining Department. The cost of the project is estimated at US$360 million. IFC will provide a loan of US$30 million of its own funds and US$10 million in quasi-equity. Loans will also be provided by the European Bank for Reconstruction and Development (US$30 million), the Export Develop
ment Corporation of Canada (US$50 million) and commercial banks (US$140 million). In addition, the EBRD will provide US$10 million in quasi-equity. Cameco will invest US$90 million in loans and equity. (More) The Kumtor Gold Company is two-thirds owned by Kyrgyzaltin, a Kyrgyz state entity, and one-third owned by the Cameco Corporation of Canada, a uranium and gold producer. Cameco, which has extensive experience of operating mines under remote tundra conditions in Saskatchewan, Canada, will provide management to build and operate the project. Kilborn/Enka, a joint venture between Kilborn Engineering of Canada and Enka, a Turkish construction group with experience in the former Soviet States, will be responsible for construction with AZAT, a Kyrgyz company. IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
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