* Company to acquire remaining 40 pct of Kounrad recovery plant
* Seller Kenges Rakishev to join board, get 20 pct shareholding
* Costs of operation 98 cents per lb vs 232 cents for Kazakhmys
By Jack Stubbs
LONDON, Aug 23 (Reuters) - Kazakhstan's mountains of Soviet-era mining waste mean profit for Central Asia Metals , a junior miner with plans to grow there despite troubles facing other companies that investors say have tarnished the country's image.
Corporate governance scandals, corruption investigations and boardroom rows at Kazakh miner ENRC have grabbed headlines, even as that group prepares to go private after a $4.6 billion buyout by its founders.
Central Asia Metals' chief executive Nick Clarke, a veteran of 40 years in the industry, said the company can overcome reticence among investors about investing in Kazakhstan, which is the world's ninth largest country and has just 17 million people.
"As the country develops and they try to build a free market then there's going to be some withdrawal pains from the old system," Clarke, who has experience across central Asia, told Reuters in an interview.
"We are a British company with a reputable management team that understand how things should be done," he said.
Using modern technology to process mining waste piled up over decades of Soviet-era operations, Central Asia Metals produced 6,586 tonnes of copper last year from its Kounrad operation on the site of an open-pit mine decommissioned in 2005. It aims to hit 10,000 tonnes in 2013.
These are modest amounts compared with Kazakhstan's heavyweights - miner Kazakhmys produced more than 290,000 tonnes last year - but Central Asia Metals produces copper at a fraction of the cost of most rivals.
This is a big advantage when weaker prices have squeezed small producers, with copper down more than 7 percent so far this year.
With a technology known as SX-EW, the group uses diluted sulphuric acid to leach copper oxide from huge 50-metre-high waste dumps, producing copper at a cost of 98 cents per lb.
That compares with cash costs after by-products of 232 cents per lb reported by Kazakhmys for the first half of this year.
Peter Mallin-Jones at Canaccord Genuity said cheap energy in Kazakhstan and not having to mine copper was keeping costs down for Central Asia Metals.
"Their main advantage is that they don't have to shift a tonne of rock," he said. "That's why the project works."
Copper prices have averaged $3.30 per lb since 2008.
The company has no debt and made a core profit of $16.1 million from revenue of $30.7 million last year.
Its share price is up 16 percent since listing in 2010 and it is one of only three dividend paying mining companies on London's junior AIM market. Since production started in April 2012 the company has paid dividends of 10.7 pence per share.
The shares were trading at 1.23 pounds sterling on Friday.
With estimated recoverable copper reserves of 250,000 tonnes the Kounrad plant can produce at its current rate for 25 years.
But with a finite lifespan at its chief asset, Central Asia Metals is now looking to expand the existing operation.
"This is an industry where you are committing suicide. You have to expand to survive," said Clarke.
Having acquired 60 percent of the Kounrad site from state body SEC SaryArka in 2007, Clarke intends to acquire the remaining 40 percent from Kazakh businessman Kenges Rakishev next year.
Rakishev will join the board in September this year. The company will issue 21.2 million ordinary shares, representing a 20 percent stake in the company after the acquisition, which will go to Rakishev.
The company is currently focussed on Kounrad - it aims to sell the Handgait and Ereen molybdenum and gold exploration projects in Mongolia.
Copper has weathered financial turbulence better than some other metals but has suffered this year and is down 28 percent since its post-crisis peak in 2011. Clarke says the company is in a strong position.
"Looking back at the last ten years I can't see a scenario when we wouldn't break even," he said.
"Being smaller we can contract quickly and can survive when the bigger boys would suffer."