Gold Fields venture suspends Kyrgyz drilling

ALMATY Thu Oct 13, 2011 1:57am EDT

ALMATY Oct 13 (Reuters) - South African miner Gold Fields' joint venture in Kyrgyzstan will suspend drilling after supporters of its exploration project in the Central Asian state received death threats only days after a violent attack on its camp, the company's chairman told Reuters.

Talas Copper Gold, a joint venture between Gold Fields and Britain's Orsu Metals , said it would postpone a drilling programme due to begin next month until Kyrgyzstan was able to guarantee the safety of local residents.

A mob on horseback armed with sticks and petrol bombs attacked the company's exploration camp in the early hours of Oct. 8, setting fire to buildings and severely beating the security manager as he fled.

The attack is the second on Talas Copper Gold's operations this year and the latest in a series of assaults on mining company officials in Kyrgyzstan, which have heightened investor concerns as the country prepares to elect its next president.

Although the company had originally planned to continue its November drilling plan , subsequent death threats prompted the local government to sign a protocol demanding the temporary halt of all activity, said David Grant, chairman of the management board at Talas Copper Gold.

"Given this new situation, we decided ... to suspend all plans for drilling until the state is able to guarantee the safety of the good citizens of Aral," Grant said, referring to the village near the company's licence areas in Talas province.

"This effectively means that drilling is suspended at least until the criminal gang and their organisers are imprisoned."

Kyrgyzstan, a former Soviet republic of 5.5 million people, holds an election on Oct. 30 that is widely seen as the final stage of constitutional reforms set in motion after the overthrow of President Kurmanbek Bakiyev in April 2010.

Rejecting nearly two decades of failed authoritarian rule, the country is attempting to create the first parliamentary democracy in Central Asia, a mineral-rich and strategic region otherwise governed by presidential strongmen.

The pro-business coalition government led by Prime Minister Almazbek Atambayev, now running for the presidency, has promised to weed out corruption in the mining sector to secure the proceeds from many untapped metal deposits, but progress has been slow.

Talas Copper Gold has four exploration licences in Talas province in northwestern Kyrgyzstan, prospective in copper, gold and molybdenum. It has invested $15 million between 2005 and 2010, and planned a further $2.5 million spend this year.

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