MOSCOW –

A press statement this week from the southeastern Siberian town of Irkutsk revived hopes that Russia’s El Dorado, and one of the world’s largest unmined gold deposits, may be about to go on the market.

Sukhoi Log (“Dry Gulch”in Russian), according to Nikolai Suslov, deputy head of the Irkutsk region agency for natural resources (Irkutsknedra), may be put up for public auction “ïn the next few months” — “by the end of 2007, or the beginning of 2008”. Suslov’s timing was initially reported by Interfax, and then Bloomberg picked up the story. The full report of Suslov’s remarks indicate that his focus was on two relatively minor prospecting licences to be put on the block in September and October — the Isko-Tagulsky nickel prospect, and the Uryahsky gold deposit.
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by John Helmer - Friday, July 27th, 2007
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MOSCOW –

The Armenian government ordered prosecutors last week to put a stop to an attempt by the Vedanta group in London to auction off its rights to the Zod gold mine to the highest bidder.

Two weeks ago, following six months of investigation, the Armenian prosecutor’s office in Yerevan went to court on behalf of the Ministry of Natural Resources, to seek a ruling to revoke the Zod licence, which has been held since 1998 by Vedanta’s Canadian-listed subsidiary, Sterlite Gold (ticker SGD). The judge deferred his ruling on the procedural ground that the due diligence, which had been undertaken by the prosecutor’s office since January, lacked the appropriate order from the government. The Armenian prime ministry then arranged for the ministerial resolution to be drafted and issued, and an accelerated investigation has already begun.
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by John Helmer - Tuesday, July 24th, 2007
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MOSCOW –

One of the oldest friends of Rusal owner, Oleg Deripaska, still calls him by the nickname, zaichik; that’s Russian for hare. The surname of Alexander Bulygin, Rusal’s chief executive, suggests the Russian for a cobble-stone (bulizhnik), but nobody calls him that for short.

The ancient fabulist Aesop didn’t think well of either hares or stones. He composed almost no fables with the former, and in those, the hare is too arrogant, or stupid, to avoid getting beaten, or eaten. As for stones, to Aesop they meant misfortune. Aesop’s animals have plenty to say about that. The hare he made immortal was the one who was out-run by a tortoise.

The big question for United Company Rusal, and its promoters, is whether the hare can carry the stone, or vice versa, across the finishing line represented by the first public sale of shares, due in four months’ time. There are already hints from the Rusal camp that they have begun arguing with each other over what’s best for getting there. That they are unable to agree is evident from the most recent series of presentations of Rusal, which Bulygin led for analysts of leading international banks in Boston, New York, Frankfurt, and London. Other presenters included Vladislav Soloviev, the chief financial officer; Oleg Mukhamedshin head of capital markets; Artem Volynets, head of strategy and development; and Valery Matvienko, head of engineering and construction. They spoke from a presentation kit running to 33 pages of colour slides, which have been obtained by Mineweb.
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by John Helmer - Monday, July 23rd, 2007
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MOSCOW –

A man without enough zinc is likely to suffer from a loss of taste, smell, hair, and sexual arousal. It’s the zinc in oysters that is one reason, at least, for their popular association with libido.

For miners of the bluish-white metal, however, global insufficiency is proving to be very good for business. Although it is one of the most abundant of the minerals buried in the earth’s crust, and one of the most common in metal applications, the scarcity of zinc can be blamed on the Chinese – and not because they think its libidinal value is as good as rhinoceros horn, or tiger’s tooth. In the year 2000, China’s share of global zinc consumption was 15%. Five years later, it had risen to 27%, dwarfing everyone else. Annual growth in Chinese demand was 20% between 2003 and 2005, 13% in 2006, and 9% in 2007.

Total global consumption of zinc (refined) this year is estimated to be 12 million tonnes. Mine and smelter supply looks like reaching 11.86 million tonnes, roughly matching demand. But the three past years of deficit of supply have caused a halving of estimated zinc stocks, including London Metal Exchange (LME) measured stocks.
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by John Helmer - Thursday, July 19th, 2007
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MOSCOW –

Charles Ponzi, an Italian immigrant to Boston, gave his name to a scheme in which he promised a 50% return to investors within 45 days of their giving him money; or double their money within 90 days. About 40,000 people invested $15 million in 1920 dollars; today that would sum to $150 million.

In essence, the Ponzi scheme pays initial investors their return out of funds subscribed by those who follow, until the market gets wind; there are no new subscriptions to pay claims; and the scheme collapses. From Ponzi, only a third got their cash back.

Junior gold miners can promise something similar; but usually not quite so quickly; and sometimes more reliably.
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by John Helmer - Wednesday, July 18th, 2007
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By John Helmer in Moscow

Insomniacs count sheep to get off to sleep, but after that, dreams come plentiful and cheap.

When Oleg Deripaska lays his head on the pillow these summer evenings, wishful thinking appears to have led him to a colossal miscalculation. Even worse, Deripaska appears to have been dozing, when he made two catastrophic statements to a London financial newspaper this week. They have undermined, perhaps fatally, Deripaska’s ambition to vault over the latest of the consolidations by Rio Tinto and Alcan, in order to strike an eventual deal with Xstrata or Alcoa.

The statements lie, like depth-charges, under what was intended to be the Financial Times’s profile of best business practice in the history of the Russian aluminium sector. Deripaska spoke explicitly on the two topics, which his lawyers and investment bankers have repeatedly cautioned him to avoid. They were the two great unmentionables at the briefing for investment bank analysts, arranged by JP Morgan in London, on June 29. But in London, as in the preceding sessions in Frankfurt, New York and Boston, they were recognized as the two prime investor risks, which have been deterring almost all the bankers from recommending a main-board London Stock Exchange (LSE) listing for United Company Rusal – in which Deripaska owns the controlling stake of 66%.

Call them the Cherney and the Putin risks.
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by John Helmer - Friday, July 13th, 2007
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By John Helmer in Moscow

Gold raiders may be pushing gold mining asset holders on to the defensive in Russian Fareast

When Winston Churchill tried to express his ignorance of how Russians conduct their affairs, he famously referred to bulldogs fighting under a rug. These days, in the Russian gold mining sector, the bulldogs are hard at it again, but the rug has slipped off –well, let’s say half-off.

There are asset raids under way, driving share prices down, for Ovoca in Magadan region; and Highland Gold in Chukotka. Ovoca and Highland are both listed on the London Alternative Investment Market (AIM); Ovoca is also listed in Ireland.

The conflicts over their assets have also spilled over into investigations of regional and federal officials alleged to have taken sides, possibly corruptly. One of the allegations being aired publicly is that regional mine licence inspectors are not enforcing mandatory licence deadlines to produce gold from deposits under development.
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by John Helmer - Wednesday, July 11th, 2007
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By John Helmer in Moscow

Talk of oil supply crunch intensifies price threat as Russian output tips and additional export markets beckon.

Russian oil producers have been losing oil output at Russia’s onshore fields since February of this year, and a combination of tax, investment, and technical factors has led to a forecast of “dire straits”, according to a new report by Moscow’s Alfa Bank.

But these straits appear to be deeper and direr for oil consumers, than for Russia as a producer; especially since new oilfield developments are likely to swing the direction of oilfield growth in the direction of China. Korea, and Japan.
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by John Helmer - Wednesday, July 11th, 2007
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By John Helmer in Moscow

Russian aluminium giant, Rusal has held a secret briefing at London’s Skinners’ Hall for its London IPO investors .

When Gioacchino Rossini, the 19th century opera composer, had grown famous and rich, he was told that a group of his admirers were collecting the equivalent of $50,000 to erect a statue to celebrate him. Rossini responded: “Give me the money, and I’ll stand on the pedestal myself.”

Rossini came from humble origins; his father was a slaughterhouse inspector, his mother a baker’s daughter. He had made himself wealthy enough, and his career assured, by the age of 32; he stopped writing music for money five years later. But the problem of cash for the self-made rich is that they never feel secure without more of it coming in.

The problem of Oleg Deripaska and Victor Vekselberg — the two Russians who made themselves very rich in a short time by mining and smelting some of the world’s largest volumes of bauxite and aluminium — is that, like Rossini, they believe the only cure for nerves is cash. But unlike Rossini, they haven’t the public reputation to stand on a pedestal. Since an Initial Public Offering (IPO) is the London market’s equivalent of a statue on a pedestal, and the investor cash at stake runs into several billion dollars, the reputational risk of the pedestal is now the subject of extraordinary measures.
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by John Helmer - Tuesday, July 3rd, 2007
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By John Helmer in Moscow

Alrosa is retrieving its diamond market positions after initial misstatements by new CEO

Alrosa, the Russian diamond miner with the largest share of the global rough diamonds market after De Beers, is reconsidering its international market strategy, and correcting several misstatements by its newly appointed chief executive, Sergei Vybornov.

Veteran international representative for Alrosa, Sergei Uhlin, announced in Amsterdam last week that the company has no intention of withdrawing its European Court of Justice case against a ruling by the European Commission to cancel Alrosa’s diamond trade with De Beers at the end of next year. Uhlin added that, not only is Alrosa confident of winning its appeal; but that if it wins, and the EC trade order is revoked, Alrosa will not necessarily decide to renew its trade with De Beers. “We are challenging our rights in principle, regardless of what we’re going to do,” Uhlin is quoted as saying. A spokesman for the company told Mineweb that Uhlin’s remarks have been correctly reported, and reflect company strategy.
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by John Helmer - Tuesday, July 3rd, 2007
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