INTERVIEW: Kazakh gold miner AltynGold on a roll

London– AltynGold listed gold miner with assets in Kazakhstan posted strong results in the first half of the year, with revenue doubling year-on-year $ 23 million and a net profit of $ 9.3 million for the period, compared to a loss during the same period a year earlier. bne IntelliNews sat down with the CEO Aidar Assaubayev to delve into the history of the business and discuss some of the challenges its owners faced along the way.

Assaubayev was born in Almaty in 1976, the son of an established mining entrepreneur Kanat Assauabayev and his wife Marussya Assaubayeva. He shared his father’s interest in mining from an early age and graduated from the Kazakh State Technical University with a degree in engineering and economics in 2000, later continuing his studies with a doctorate in economics of the Moscow State Institute of Steel and Alloys. In 2012, with his family, he bought AltynGold Plc, which has grown into a successful business. Aidar is now based at Almaty, where he lives with his wife and children.

bne: Your family has now controlled AltynGold for almost a decade. What first attracted you to the business and convinced you that it was a great investment?

AA: We acquired AltynGold, or Hambleden mining as it was then called, in 2012 through a public offering to the company’s shareholders. At the time, the outlook for the company was rather bleak. In addition to being involved in a dispute with the government of Kazakhstan following a cyanide leak in one of the company’s facilities, he was also in financial hot water after the European Bank for Reconstruction and Development had frozen his line of credit. Operationally, the company’s gold reserves were also nearly depleted thanks to an earlier decision to use it as a surface mine.

Yet despite these challenges, we saw tremendous potential in the business and were confident that our experience would give us the knowledge and ideas to turn it around. After gaining control, we were able to quickly resolve the legal dispute by working with authorities to repair the environmental damage and investing heavily in company facilities to ensure that a similar incident does not happen again. Operationally, our exploration focus has shifted underground, where the long-term potential of the company resides. We were able to significantly increase reserves and successfully transition operations from surface mining to underground mining, resulting in a significant increase in annual production. I am delighted to say that the initial potential we saw in the business was not misplaced and that we are now on track to produce 1 million tonnes of ore and 60,000 ounces of gold per year of by 2025.

good: You mention that your family already had experience in the mining industry before acquiring AltynGold. Could you expand on and explain how the Assaubayevs entered the industry?

AA: The mining industry has always been a natural fit – my dad Kanat assaubayev was the first Kazakh to receive a doctorate in metallurgy, and before starting his business career, enjoyed a successful career in academia as president of the Kazakh Polytechnic Institute Department of Metallurgy and Mining. In the 1990s, as Kazakhstan began to establish his new post-Soviet economy, a plethora of new business opportunities emerged that encouraged him to leave academia to pursue entrepreneurship. These early ventures, which included the sale of imported cars and electronics, my father’s consultancy tenure in the main state bank, proved to be very successful and (supplemented by a bank loan and the company’s proceeds my mother’s pharmaceutical), were enough to buy the production facilities of what would later become KazakhGold. It has proven to be an extremely valuable learning experience, teaching us how to grow a profitable business from the bottom up. We bought it in a state of complete disrepair – following the company’s bankruptcy, its mines were idle and its machinery completely worn out – and I remain incredibly proud of what we were able to accomplish by rebuilding the facilities and modernizing. extraction and processing operations. By taking this boiling company and turning it into the first private Kazakh company to be listed on the London Stock Exchange, we have gained the experience necessary to make our future pursuit with AltynGold a success. Fortunately, my siblings and I have always shared our father’s passion and individually pursued studies in the field before entering the family business.

good: What role does the family play in the day-to-day management of the business?

AA: Our family has always played an important role in the day-to-day operations of AltynGold. As CEO, I have been responsible for overseeing the company’s strategy and managing its day-to-day business operations since 2013, while my father and younger brother, Sanzhar Assaubayev, are chairman and executive director respectively. We have always viewed our family’s involvement in the management team as beneficial to our success, as it not only ensures a high level of trust among key decision makers, but also maintains business continuity by ensuring that my father’s passion and industry knowledge will stay with the company for years to come.

My mother, Marussya Assaubayeva, was also a strong businesswoman and devoted philanthropist. The values ​​she fostered within her children and extended family have also had a significant impact on the culture and ethics of the company.

good: What obstacles have you encountered as a Kazakh company in attracting investment abroad?

AA: As with any successful business operating within the CIS and emerging markets in general, we are subject to scrutiny from international investors. We strive to adhere to the highest levels of ethical behavior and transparency in our transactions. Nonetheless, like many of our peers, from time to time we face baseless and frivolous allegations.

One of the most egregious accusations we received in this regard was that our family had embezzled money from Kazakhstan United National Pension Fund (UNPF). The reality of the situation was far from that. My brother, Bauyrzhan Assaubayev, had helped two former business partners secure more capital for their MegaTransAsia business by personally guaranteeing a loan they had taken out from ATFBank. Immediately after the restructuring of the loan and the injection of the new funds, it appeared that these two people were planning to withdraw the newly acquired funds by establishing Bauryzhan. Using the HomeBroker company, they filed a claim against MegaTransAsia’s loan debts with ATFBank and demanded repayment of the loan from Bauyrzhan. HomeBroker then issued bonds on the Kazakhstan Stock Exchange where one of the private pension funds (which later merged with the United National Pension Fund) acted as an investor. After HomeBroker eventually defaulted on its obligations, the right to third party obligations to HomeBroker was then transferred to the UNPF, leading them to continue the legal action against Bauryzhan. We have won all recent lawsuits with the UNPF and are confident that we will be able to conclude the lawsuit soon.

In our view, the best way to dispel these stereotypes and allay the associated concerns is to ensure that we are as transparent as possible in our business procedures. This has always been a priority for us and remains a priority for us in the future.

bne: Speaking of controversies, one of the biggest and most public disputes you have faced involved Russian mining company Polyus over a decade ago. What do you think sparked this dispute and how is your relationship going today?

We sold KazakhGold to Polyus in 2009, after extensive discussions with the majority shareholders of Polyus at the time on our shared vision for the global market and our collective growth plan. At the time of the sale, we were convinced that Polyus was the right buyer and we even went so far as to refuse other more lucrative offers to ensure the success of the transaction. Shortly after the transaction was finalized, however, changes were made to Polyus’ management team which impacted the company’s strategy and moved it away from the growth trajectory on which we had agreed to. We naturally felt blinded by this, and after challenging it, we were faced with a lawsuit from Polyus who tried to force us to back down. Once a legal dispute begins, it tends to come to life and aggressive legal action has subsequently been taken on both sides.

It is important to note, however, that at no time is the High Court of the United Kingdom made us guilty of wrongdoing, and the UK The FCA or other regulatory bodies are laying charges against us. In the end, we were able to reach a settlement that proved to be satisfactory for both parties, and as part of this, we sold KazakhAltyn (the operating company of KazakhGold) in 2012. We bought Hambledon Mining ( now AltynGold Plc) shortly thereafter, and have focused our efforts on this business for the past nine years. Our relationship with Polyus is now satisfactory, and in recent years we have even discussed the possibility of pursuing several business opportunities with their team.

good: What are your long-term business goals for AltynGold in the coming years?

AA: Our goal is to effectively use our expertise in mining and natural resources, pursuing a diverse portfolio of projects in the mining, oil and gas industries. Beyond that, we are also actively working to attract foreign investment in Kazakhstan and Central Asia through portfolio flows within international capital markets as well as joint ventures with strategic partners. We are also very committed to local economic development by creating jobs in the regions (at present, more than 60% of our employees are local residents of Glubokoe district in Kazakhstan). We believe this Kazakhstan is an undervalued and often overlooked market, but with enormous investment potential for those who wish to take the time to understand the local nuances.

© 2021 bne IntelliNews, source Magazine

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