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  • ckmb54 ckmb54 Feb 20, 2003 10:59 PM Flag

    Following the Trail of Magadan Gold 1

    . "It took us some time to realize that unless the federal government moved in to play a role in solving this conflict, all our attempts to regulate it were pointless," Ivany said.By October, they had succeeded. Kinross was able to hammer out a deal directly with the Finance Ministry to buy out its Russian shareholders and pay back the gold loan. The deal needed Tsvetkov's guarantee. On Oct. 16, under pressure from the Finance Ministry, Tsvetkov agreed."Polymetal probably thought they could make a lot of money out of this, but nothing happened. They lost. They thought they were cleverer and attacked Kinross. They wanted to use the debts to push them out but it didn't work," Kukharuk said.But then two days later Tsvetkov was killed."Tsvetkov was the prime participant in this deal," Ivany said. "It didn't help that he got killed. Other people in the administration have been reluctant to sign."Now, four months later, Kinross is awaiting the finalization of the gold loan deal. Since last Sunday's elections, progress has been made. This past week, Kinross bought out the 25 percent in Omolon owned by the new shareholders of Geometal Plus. It still has to complete the purchase of the remainder of shares, a 21 percent stake, from two bankrupt companies, Rossiisky Kredit bank and Magadan Gold and Silver.Its license for the Birkachan gold field is awaiting final approval in the Natural Resources Ministry. Without Birkachan, Kinross most likely would have to pack up. The open pit Kubaka mine is now running out, apart from a patch of reserves left underground, and Kinross estimates it will give it just a year's more work. Kinross hopes finds at Birkachan will keep it in the region for at least five more years.In a telephone interview immediately after Sunday's election results came in, Dudov said he supported the Canadian company staying in the region.He will have a lot to prove.
    "Tsvetkov created a tremendous administrative burden," Ivany said, citing attempts to force Kinross into using crony suppliers by threatening to create problems for the company at customs. Last year alone, Omolon was checked 300 times by different regional inspection teams, he said. "We'd like to see that ease off under the new governor."For many employees, it goes further than that. "It's almost impossible to work in a region where your future hangs on the whim of the governor," said Omolon site manager Anderson.Other investors could be hoping for that to change, too. Major Moscow-based financial industrial group Interros is eyeing the region ahead of this year's privatization of the Natalkinskoye gold field, which contains 250 tons in reserves. Interros moved in as a major player on the gold market last year when it bought Russia's biggest gold producer, Polyus in Krasnoyarsk.
    Industry players say Polymetal may also launch a bid, though the company itself denies it is interested. And the British-Russian Peter Hambro mining company announced this week it was going to bid for the field in partnership with Magadan's second biggest gold company, Susuman Gold, owned by influential local player Vladimir Khristov.http://

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