MOSCOW. Oct 5 (Interfax) - Russia could become the world's biggest gold producer if it solves certain investment-related problems, Mike Armitage, managing director of the engineering consultancy SRK, said at a press conference at Interfax's head office in Moscow.
"Russia has enormous potential, and I firmly believe it has the potential to be the number one gold producer in the world," Armitage said, adding that problems related to licensing and the verification of reserves were arising.
Peter Hambro, chairman of the board of directors at Britain's Peter Hambro Mining Plc, told the press conference that foreign companies needed reliable partners to succeed in Russia.
"As a Russian miner, we don't have problems - it's the foreign perception that makes it complicated, Hambro said.
Hambro said he knew of five or six Western companies prepared to invest in Russian gold mining, provided they found a strong partner.
"Large American investment bankers working with us tell us that there are five or six very large companies looking to get into Russia with Russian partners. I think when they get in, it will open a floodgate of investment. There is also huge interest from Russian companies, for example Polyus," Hambro said.
Mike Armitage said it was hard to assess Russia's mineral potential because much of the information about resources remained off-limits.
Regarding the auction for the rights to the Sukhoi Log field in the Irkutsk region, which has yet to be announced, Armitage said this was a very large field with a low metal content in ore. Some experts have said that this casts doubt on the feasibility of mining Sukhoi Log.
Peter Hambro said Sukhoi Log's appeal lay in the fact that "it is the last big Soviet-era site that has been explored but not auctioned." But Sukhoi Log's quality is not obvious, Hambro said.
Armitage said uncertainties over tenure were of concern to investors. Peter Hambro, for his part, said he welcomed confirmation by Sergei Fedorov, Director of State Policy and Regulation of Resources in Russia's Natural Resources Ministry, that the new law on sub-surface assets would only apply to those assets obtained after the legislation was passed, and not retrospectively.
Armitage and Hambro said many of the issues of concern to investors would be raised at the Minex forum in Moscow on Thursday and Friday.
Peter Hambro Mining owns the Pokrovsky Mine in Russia's Amur region and holds the right to develop the Pioner field, also in the Amur region. The company aims to be producing 1 million oz of gold by 2009, compared with 271,000 oz in 2004.
http://www.interfax.ru/e/B/finances/26.html?id_issue=11402576
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