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Softly, softly in the ‘Stans’ seems to be the theme from a handful of budding gold producers that will be hoping for a major re-rating to put them on a par with their peers in West Africa once they start pouring gold bars.

The region is, according to one of its proponents Stephen Ross of Manas Resources, home to the “cheapest gold in the world ... almost by a factor of 10 when compared to West African gold”.

The reason?

“In my opinion, the market just does not trust the region and has not seen enough success stories to warrant an increased valuation – the same as West Africa 10 to 15 years ago,” Ross says. Permitting delays have been the headline reasons for a lack of success stories in a region that on the surface is resplendent with big gold deposits (often literally!). In response, the new crop of contenders like Manas and its peers such as Chaarat Gold, Central Asia Resources, Alhambra

Resources and Hambledon Mining have adopted the strategy of starting small. This is seen as improving the chances of expeditiously receiving approvals as well as proving their bona fides (to locals, authorities and the investment community) ahead of more substantial developments thereafter.

So instead of the 100,000 ounce per annum development typically seen in West Africa – and these days that number is heading towards 200,000ozpa judging by the likes of Gyrphon and Ampella, for example – operations of 20,000-40,000ozpa are de riguer in the Stans.

Central Asia Resources began mining last month at its Dalabai project in Kazakhstan, where the production rate averages 25,000oz of gold (and 550,000oz of silver) at cash costs of $US540/oz.

The beauty of the small profile is the small capex ($US10.7 million), and yet at a budgeted $US1500/oz gold price, net cashflow for the initial 2.7 year project comes in at a not insignificant $US62 million.

Next up for Central Asia Resources will potentially be a seven-year, 65,000ozpa CIL project at Altyntas, which the company is “preparing for development in 2012”.

Chaarat will start with 40,000ozpa at its Tulkubash project (Kyrgyzstan), which will then be expanded to 100,000oz. In the background is the “company maker” Kiziltash project where an initial 180,000ozpa profile is envisaged by mid-decade.

Hambledon plans have been to produce 23,500oz in 2011 rising to 100,000oz in 2016 (with operating costs “mid quartile) from its Sekisovskoye project in Kazakhstan. Last month the company announced the acquisition of two other projects, one of which could add 20,000ozpa to the Sekisovskoye equation from mid-2014.

And so it goes on.

For its part, Ross’ Manas is awaiting its permitting and is busy completing a feasibility study on mining and processing high-value near surface oxides at the Kyrgyzstan-located Shambesai – the latter to be completed in the current quarter.

Shambesai has 11.6 million tonnes grading 2.1gp for 766,000oz, including a high-grade oxide component of 2.7Mt at 3.6gpt for 300,000oz.

At an A18.5c share price last week, Manas was capitalised at $33 million, with the company also having about $A6 million cash.

Some at the big end of town evidently like what they see at Manas, with BW Equities, Blackwood Capital and Macquarie agreeing to underwrite 20c options (that were to expire at the end of last month) to the tune of $A10 million. Manas’ major shareholder, West African miner Perseus was also a party to the deal, by agreeing to subscribe for that number of shares needed to maintain its 23.86% shareholding.

Prior to the deal, Lion Selection held 9.78% of Manas and Macquarie 8.45%.

They are significant backers.

Manas and its fellow developers are undoubtedly expecting a few more to cotton onto the opportunity in the Stans in the short term. And in a big way too!

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