Celtic Resources, the Irish-based minerals development company, has said its 50 per cent interest in a gold deposit in the Russian far east has been seriously affected by the current turmoil in Russia.
The company, which holds a stake in the Nezhdaninskoye gold deposit in Yakutia, said difficulties in the Russian banking system have led to problems with the operation of the bank accounts of its subsidiary, the South Verkoyansk Mining Company (SVMC). Some of the funds of SVMC, a joint venture with the state gold company of Yakutia, are currently frozen and foreign exchange transactions are not possible.
Celtic said cost and time overruns had also been incurred in securing and transporting large bulk samples of gold ores for testing in western laboratories while the unsettled nature of the climate for foreign investment in Russian projects has adversely affected the company's financing strategy.
Celtic, which raised $500,000 through an open offer to shareholders in June, had intended to place shares on or before September 21st to raise more money.
Discussions with a major British bank regarding project finance for the treatment of concentrates at the deposit have also been suspended until some clarity emerges regarding the Russian economic situation, the company said. Talks on a production sharing agreement are also in abeyance pending clarification of the new Russian government's policy.
Celtic said it had taken a number of steps to conserve its cash resources and to protect the value of its asset in SVMC. Recent testwork on complex ores from Nezhdaninskoye, which yielded promising initial results, have been suspended as have mine developments and further feasibility studies.
Celtic also proposes to approach larger creditors to postpone payments until the current situation in Russia is clearer.
