Kryso Resources lands major Chinese investor for Pakrut gold project

Kryso Resources (LON:KYS) has secured a £10.99m investment from China Nonferrous Metals International Mining (CNMIM) in a conditional placing of 73.27m shares at 15p each. The proceeds will help fund the development, and further exploration, of the Pakrut gold project and further exploration at the Hukas nickel-copper project, both in Tajikistan.

The placing shares representing 29.9% of the total issued share capital of the company.

Last month, the company announced it held talks with an un-named Chinese investor, with the parties signing an exclusivity agreement. The exclusivity period lasted for 7 days and ended without agreement.
Crucially, the new investor intends to procure debt financing for no less than 70% of Pakrut’s development costs, within three months of the board approval of the bankable feasibility study (BFS). The debt financing would fund the constructing and commissioning of a mine at Pakrut.

“Kryso is extremely pleased to have entered into a strategic agreement with a company with such a strong track record in the successful development of major mining projects”, Kryso chairman and acting MD Trevor Davenport commented.

“CNMIM is supportive of Kryso's primary objective, to develop the Pakrut gold project to commercial production at the earliest opportunity, and we are confident that CNMIM will be able to source the necessary financing for the company to fulfil this objective.”

The company highlighted that the BFS results will be published shortly.

Kryso has been finalizing the expanded Bankable Feasibility Study (BFS) on its 3Moz (million ounce) Pakrut gold project in Tajikistan. The study’s completion was expected earlier, however Kryso decided to extend the BFS to include the most recent drilling results which were ‘better-than-expected’. According to Kryso, the latest results indicate excellent potential to expand the underground resource base.

CNMIM have also been issued warrants - one for every ordinary share - as part of the placing, with a 21p exercise price. Furthermore, CNMIM will have the right to appoint two directors to the Kryso board. The company also stated that one of these new directors will assume the role of non-executive chairman.

At the end of March, Kryso told investors that high grade drill results from Ore Zone 1 had shown that the mineralization widens at depth, sparking a rethink from the company and BGRIMM. Kryso and the BGRIMM (Beijing General Research Institute of Mining and Metallurgy) now believe that a more robust mine development plan will be forthcoming if Pakrut is developed solely as an underground gold mine to exploit the widening underground gold structure.

The assay results reported by the company in late April included intercepts of 25.5 metres at 7.5 g/t (grams per tonne) gold, 42.4 metres at 5.4 g/t gold and 12 metres at 6.4 g/t gold from Ore Zone 1, while Ore Zone 3 assays included 9 metres at 7.5 g/t gold and 13.5 metres at 7.5 g/t gold containing 4.5 metres at a higher grade of 20.1 g/t gold.

With all other major elements of the study largely complete, Kryso now expects to complete a fully optimized BFS, including the new resource model, in August.

Also in June, Kryso increased the project’s measured & indicated JORC resource by 26%, with a further 353,300oz, taking the total JORC resource to over 3.024Moz of gold. The company also anticipates further upgrades to Pakrut’s resource with the 2010 drilling programme well underway.

The Pakrut gold project, Kryso’s primary focus, is located within the southern portion of the Tien Shan Fold Belt, north-east of Tajikistan’s capital, Dushanbe. The Tien Shan Fold Belt, extends from near the Aral Sea in Uzbekistan through the northern part of Tajikistan into China and then into Mongolia.