Project work on the Altyntau Kokshetau

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Project work on the Altyntau Kokshetau




























                                                                                                 Passed the work: Ramazan ALdiyar
                                                                                               Accepted the work: Kenzhaliev O.B.

Almaty 2024

1.Executive Summary  

The Vasilkovskoye Gold Deposit, operated by AO "Altyntau Kokshetau" under the subsidiary of KazZinc, stands as one of Kazakhstan's flagship enterprises in gold mining. Located near Kokshetau, the deposit ranks among the top 20 largest gold deposits worldwide, with gold reserves exceeding 360 tons. Initially discovered in 1963 and officially developed by 1981, the Vasilkovskoye deposit has played a significant role in Kazakhstan's mineral resource economy.  

A new gold processing plant, commissioned in 2009, has transformed operations with state-of-the-art technology from Canada, Australia, and the United States. With a processing capacity of up to 8 million tons of ore annually, the facility produces approximately 400,000 ounces of gold each year. The plant utilizes a combined processing technology, including flotation, gravity concentration, and cyanidation, significantly enhancing extraction efficiency and operational profitability.  

The deposit is situated at the intersection of the Dongulagash and Vasilkovsko-Berezovsky faults, featuring a block-framed tectonic structure with prominent hydrothermal alterations. Gold mineralization predominantly exists in arsenopyrite-bearing quartz veins within diorite and granodiorite intrusions of the Zerendinsky Complex. These geological formations are exemplary of stockwork gold-sulfide-quartz deposits, which are recognized as high-potential reserves for increasing Kazakhstan's gold production.  

Kazakhstan has set an ambitious target of reaching 70 tons of gold production annually to bolster its economic stability and strengthen its mineral resource base. The Vasilkovskoye deposit, with its rich reserves and advanced technologies, is pivotal in achieving this national goal.  

In addition to its industrial importance, the deposit significantly contributes to the regional economy, providing employment to over 2,000 specialistsfrom Kokshetau and neighboring areas. The strategic implementation of modern exploration and extraction techniques ensures sustainable production and long-term growth.  

By leveraging cutting-edge technology, geological expertise, and operational efficiency, the Vasilkovskoye Gold Deposit positions itself as a key driver in Kazakhstan's mineral resource sector and a significant contributor to global gold production.  

2.Company Summary

The company’s primary product is refined gold (affined gold), with the National Bank of the Republic of Kazakhstan serving as its main buyer since September 5, 2016. Refined gold is sold based on prices set by the London Bullion Market Exchange (LBMA), with applicable discounts provided by the National Bank. In the year ending December 31, 2020, the company sold 13,988 kg of refined gold. Additionally, gold-containing products, such as activated carbon, were sold to the Parent Company at market prices minus processing costs to produce refined gold. As of December 31, 2020, the gold price on the LBMA stood at $1,891 per troy ounce, while the projected price by Glencore was $1,809 per troy ounce.

2.1 Company Ownership

The company operates as part of a larger corporate group, with ownership primarily structured under the Parent Company. The Parent Company ensures strategic oversight, financial stability, and access to markets.

2.2 Start-up Summary

The company’s early operations were financed by the Parent Company, covering key start-up expenses. Costs were primarily allocated to legal fees for compliance and contractual setup, initial marketing efforts to establish commercial relationships, and consulting fees for production optimization and operational efficiency. Inventory and infrastructure expenses accounted for a significant portion of the start-up budget, ensuring readiness for gold production and sales.

2.3 Company Locations and Facilities

The company’s primary operational facilities are located in Kazakhstan, where the main gold mining and processing activities take place. The site is supported by a well-developed auxiliary infrastructure that includes administrative buildings, employee facilities, storage warehouses, and processing plants. Warehouses handle gold-containing materials, including activated carbon, prior to further refinement. To support long-term growth, there are plans to expand the processing facilities, improve warehouse logistics, and modernize production equipment, ensuring alignment with global safety and environmental standards.

Business Strategy

SWOT Analysis. Strengths: Sufficient gold reserves at the mining site; stable financial position with steady revenues; well-developed supporting infrastructure; attractive social benefits package for employees; revenue from gold sales is in tenge, minimizing devaluation risks since pricing depends on USD-based gold prices; recognized as the largest gold mining company in Kazakhstan. Weaknesses: Shortage of skilled technical personnel due to the region’s labor market being primarily agricultural, with a lack of industrial experience in mining and metallurgy; complex production technology required for the current deposit; partial misalignment with global best practices in occupational safety; non-liquid inventory stocks on hand; overstocking of warehouses, leading to inventory issues. Opportunities: Potential for reserve growth through increased exploration activities (geological exploration works); implementation and improvement of new organizational technologies to enhance labor productivity and reduce production costs. Threats: Rising inflation rates; stricter regulatory requirements (environmental, labor, tax); increased wage costs due to inflation and a large workforce; risks of environmental or technological accidents; global economic instability and disruptions; fluctuations in global metal prices.

Company Vision: The company aims to achieve a balanced financial outcome by meeting key financial and economic indicators, ensuring safe working conditions and preserving the environment.

Strategic Goals: The company’s key financial and operational goals include occupational safety, improving EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), enhancing EBIT (Earnings Before Interest and Taxes), increasing FCF (Free Cash Flow), optimizing CAPEX (Capital Expenditures), and maximizing ROCE (Return on Capital Employed).