Interim Management Statement


 

TIDMKZG 
 
RNS Number : 5493C 
KazakhGold Group Ltd 
16 November 2009 
 

KazakhGold Group Limited (LSE: KZG) 
Interim Management Statement 
 
 
16 November, 2009 
 
 
KazakhGold Group Limited ("KazakhGold" or the "Company") is today pleased to 
provide an update of the operations of KazakhGold and its subsidiaries (the 
"Group").  since the completion of the partial offer by Jenington International 
Inc. ("Jenington"), an indirect wholly-owned subsidiary of OJSC Polyus Gold 
("Polyus Gold"), in August 2009. 
 
 
Operational highlights: 
  *  9 months 2009 gold production of 54.9 k oz (of gold in flotation concentrate) 
  *  9 months 2009 average gold price received of US$ 762.5 per ounce1, on sales of 
  52.2 k oz 
  *  The poor condition of much of the Soviet-era sub-surface mine infrastructure has 
  made it increasingly difficult to gain safe access to the high grade ore 
  deposits. During the first 6 months of 2009, the Group achieved the following 
  results: 
    *  Stable growth of production volumes - from 169.7 kg of gold in January to 
    215.3 kg in June, despite funding constraints of current operating activity. 
    *  Resumed production at heap leaching facilities at Aksu and Bestobe, which had 
    ceased in the end of 2008 due to the crisis and lack of financing. 
    *  Ventilation shaft overhaul completed at Bestobe from the zero depth mark to 160 
    m horizon; shaft furniture overhaul and rewiring of the West shaft from the zero 
    mark to 340 m horizon performed. Water treatment facilities and drinking water 
    pipeline constructed and launched. 
    *  After several years of downtime, shaft ?39-41 at Aksu was reconstructed and 
    brought into production. Overhaul and maintenance works were performed at a 
    number of operating and administrative facilities. 
    *  Oxygen plant construction was completed at Zholymbet in preparation for 
    commissioning. Overhaul and maintenance works were performed at production 
    workshops and the mill and mine site fence. 
 
 
 
 
 
 
Partial Offer 
 
 
Following the partial offer in August 2009, KazakhGold became a 50.1%-owned 
subsidiary of Polyus Gold, the largest gold producer in Russia and the tenth 
largest gold producer globally. Representatives of Polyus Gold were subsequently 
elected to the Board of KazakhGold and have assumed management control. Polyus 
Gold continues to make progress on enhancing KazakhGold's internal controls and 
procedures and the development of its strategy. The Board believes that the 
operational and financial expertise of the Polyus team will help KazakhGold to 
ramp up production and continue further development of existing and prospective 
assets. The Company is currently evaluating the applicability of the tax 
regulation of the Republic of Kazakhstan to the partial offer. 
 
 
Publication of financial information 
 
 
The new management has also initiated an extensive series of measures to improve 
the operations and internal systems and controls of the Company. As part of 
those measures, the Company is trying to recover and restore primary accounting 
and production documentation, in order to confirm the historical accounting 
records. This process is ongoing and, accordingly, the Company has decided not 
to publish interim financial statements for the first six months of 2009. 
 
 
Such publication is required by the terms of its U.S.$200,000,000 Senior Notes 
due 2013 (the "Senior Notes"). The Company has informed the Trustee of the Trust 
Deed for the Senior Notes of this breach, and, following completion of a 30 day 
'grace period' on 20 November 2009, expects that the Trustee will inform the 
holders of the Senior Notes that an Event of Default has occurred. The Company 
cannot be certain that Noteholders holding at least 25% of the outstanding 
Senior Notes will not take enforcement action in respect of this Event of 
Default, upon which the Senior Notes, together with accrued interest, will 
become immediately due and payable.  The Company is considering all its options 
with respect to the Senior Notes. 
 
 
 
 
For further information please contact: 
 
 
Alexey V. Chernushkin, Director, capital markets and IR 
Evguenia V.Buydina, IR manager 
+7 (495) 641-3377 
+7 (495) 785-4031 
ir@polyusgold.com 
 
 
Anton A. Arens, PR Director 
+7 (495) 641-3365 
+7 (495) 544-5496 
pr@polyusgold.com 
 
 
 
 
1 KazakhGold sells flotation concentrate for further re-processing, which led to 
lower price per troy ounce of gold sold than price per troy ounce of refined 
gold sold. 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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