WH Ireland Analyst Paul smith said of Tengri Resources “The scoping study into a two-phased approach for the development of Taldybulak in the Kyrgyz Republic has been completed. The results using lower commodity prices (US$1,200/oz gold and YS$5,500/t copper) do not meet the hurdles for the Company’s investment criteria at the present time (IRR of >25% and costs in the lowest cost quartile). The study assumed production of 70koz gold and 8kt copper per year (for 28 years) which would require a capital cost of US$320m.
The result is that Tengri has now suspended all material operations in the Kyrgyz Republic to preserve shareholder value. The company is looking for additional assets which might have a lower capital cost and better returns, not necessarily in Kyrgyz.
Despite the setback at Taldybulak, the assets in Kyrgyz have value and would generate significant revenues over a long mine life at the higher metal prices we have seen over the past few years. Accordingly, despite the suspension of operations at Taldybulak we maintain our Speculative Buy recommendation and target price of 12p (which we based on the in situ $/oz value of the gold demonstrated in the ground, discounted for stage of project and location)”
