A Russian-born nuclear power research engineer, Dr. Kurzin has played a key role in acquiring and developing several important mining assets in the former Soviet Union. As you’ll read, he’s a man of impeccable character and hard work. And his fascinating story of how he corresponded with his wife in England is stuff from spy novels. With his beautiful Russian accent and a fierce resolve, we think you’ll appreciate why Sergey belongs with the elite of the Explorers’ League. Please help us welcome Dr. Kurzin…
Explorers’ League Editor Jeff Clark: Welcome to the Explorers’ League, Sergey! We’re honored to have you.
Dr. Sergey Kurzin: Yes, thank you very much. It is an honor for me.
XL: You have a very interesting background. Let’s start with where you grew up.
SK: I was born in Moscow in January 1960, so I’m a Capricorn, which tells you a lot! In 1959, the Soviet Union created a special scientific center, called the Academy Town Scientific Center, to give a boost to the Trans-Urals [Siberia] part of Russia, which is huge by territory but didn’t really have any science or cultural center.
My father was a scientist, relatively young, who was invited to be there. It was a good opportunity, with a lot of good equipment, laboratories, etc. So he left Moscow and moved our family to Siberia. It’s located 25 kilometers from Novosibirsk, which is the largest Trans-Ural city in Russia, about 1.5 to 1.7 million people. So I grew up in a pretty unique environment. All our fathers were very successful scientists and our school was full of successful scientists, from history and philosophy to math and physics and chemistry, including geology. We also learned English. We called it “Academy Town.” So we were like a small Cambridge or Harvard, if I may compare it. We were all oriented toward some sort of science, and we were quite driven, quite dedicated.
A lot of my friends immigrated to all over the world, like a brain drain from Russia, and many of them still live in the States, Britain, France, Israel, etc. And a lot of them are very high up in their fields. I am one of the few that are in business; the majority are in science. For instance, one of them is a full professor of math at Cambridge University. Another is a leading geophysicist at Baker Hughes in Houston.
XL: And you started as a nuclear power research engineer.
SK: Yes. My degree took six years because it’s nuclear, and I graduated in 1983. I then moved back to Moscow and joined the Moscow Technical University, which is the oldest technical university in the former Soviet Union. It was established in 1830 and is quite well known. A lot of famous Russian Soviet engineers came out of there, like Tupolev, of Tupolev Aircrafts, for instance. My specialty was in nuclear power machines and installations. I went to work in Moscow in abstract nuclear physics, like what they do in Geneva today. My sub-specialty was thermodynamics, or heat exchange.
XL: When you lived in Moscow, Sergey, what was the view of America then? And how would you contrast it to how Russia views America now, if it’s any different?
SK: I want to say, in advance, this is my personal opinion, which could be shared by many other people but not necessarily all people. And this isn’t a political statement, by all means. When I was in school, I had a very warm feeling towards America. Some of my friends were influenced by Russian propaganda, but we were a relatively sophisticated people behind the Iron Curtain. A lot of our fathers in Academy Town would be traveling abroad for different symposiums, conferences, so we were living in jeans and listening to the Beatles and Rolling Stones and Deep Purple and Queen and you name it in those days.
America was quite popular and even a lot of Russian rock groups talked about America from the stage. We wanted to go there, you know what I mean? Yes, we were a special part of the Russian population, what we called “intelligentsia,” but we very much wanted this freedom, this Western thing. There was no animosity whatsoever from my generation, not in my circles. In fact, there was a lot of respect and admiration towards America. I think it’s very different now, I have to say.
XL: And how is it different?
SK: Well, I haven’t lived in Russia for nearly 20 years, since 1990, and I don’t often travel there these days because after we sold Oriel, I don’t have any business in Russia. I haven’t been there probably for six, seven months, and I travel much more in Kazakhstan. But I think the opinion generally among Russian people is that they are much closer to Europe now than to the United States. And I think the reason is due to American dominance or, to some extent, arrogance. America basically does whatever they want to do. They try to dictate to the whole world how to live, and maybe some country will swallow it, but Russians do not swallow that very well.
XL: Are there other things you would attribute this American dominance to?
SK: Like when America installs nuclear missiles in Poland, claiming that it’s against Iran. Well, you need to know a little bit of geography. Yes, it’s a couple thousand miles away, but they’re not buying that in Russia. And the same with Georgia, bringing them to NATO. I’m not saying Russia has done right by the way they reacted, I’m just saying these sort of things do not help, and they alienate Russians very much. After the collapse of the Iron Curtain and the Wall, I think Russian people very much wanted to be welcomed. But that path was not taken, there was still no full trust of the Russians – but I think the mass media is not very objective.
On the other hand, I actually don’t like current Russian politics, either. I think they’re also aggressive, too arrogant. Some of this is caused by high oil prices, gas prices, gold prices, copper prices, nickel prices, you name it, and not necessarily by success in its economy. So, the fact is that people became arrogant, and therefore their behavior became a little bit too arrogant. I think it will be corrected, and I think it is being corrected as we speak. Sorry for a long answer to a short question, but it think it’s a very important issue. So complex are the factors, aren’t they?
XL: They are. I understand you have a James Bond-type story about how you communicated with your wife after you first met.
SK: Well, I don’t want to bore people with this story. But actually, it is sort of romantic and pretty, a different story.
XL: We want to hear it.
SK: Okay, my wife Jenny will like it! [laughs] At the time, I was not able to speak such good English. It was October 1981, and I was walking in the Moscow Metro and by pure coincidence saw two girls who were dressed very differently and didn’t speak Russian. It was clear they were not Russian. They approached me, and I was able to speak a bit of English. They said they lost their way to their hotel, which was just opposite the Red Square on what used to be called Gorky Street, which you may know quite well from the book. So I said I would take them to their hotel, and while we were on our way, I asked what they were doing there and why they were alone... this was 1981, and in those days the tourists didn’t travel alone without the “Intourist,” which was totally infiltrated with KGB. I asked why they had come to Moscow and they said they were both artists. They both liked English, history, etc., and Caroline, Jenny’s best friend, was from the National Gallery in London and Jenny is a Heraldic artist. I offered to take them to the various galleries throughout Moscow, because, as I saw it, there was no way they could find the galleries themselves. Jenny and I started talking and we liked each other and it was all pretty romantic. So that’s how it began.
XL: But she had to leave then, right? How did you stay in touch with her?
SK: Yes, after four days Jenny and her friend had to go back to England, and I thought I’d never see her again. It was pretty sad, you know... but we agreed that we would try to write to each other, which we did. We wrote quite a few letters, but neither of us received any of them because they were stopped, as things were in those days.
So I called my friend who spoke fluent English, who was a relative to Vladimir Ashkenazy, quite a famous piano player and now conductor, perhaps you’ve heard of him? Vladimir was the most famous Icelandic person in Iceland at the time, and he basically introduced my friend to the Icelandic Embassy and the Icelandic ambassador, who agreed to help Jenny and me in our correspondence.
So basically, I would meet the ambassador in her car somewhere on Lenin Avenue or Gorky Street. She would stop her car with the “diplomatic” number plates, which was immediately noticeable. I would jump in the car and we’d drive to her apartment, which was tricky because you had to go through the police, but luckily, they didn’t stop diplomatic cars. It was quite complicated, it was like in good films, you know, like the Gorky Street-type of thing, that’s exactly how it was. So I would pass my letter to the ambassador, and because the Icelandic Embassy in Moscow was so small, it didn’t have its own diplomatic mail – they would send it with Norwegian diplomatic mail, because Norway obviously had a bigger embassy. The letter would go to the Foreign Ministry in Oslo and onwards to London with the stamp of the Norwegian Foreign Ministry. So Jenny would eventually receive my letter and she’d probably write back the same day, but I would only receive her letter three or four months later.
Then, I had to find a common time and a busy place in the middle of Moscow to meet the Icelandic ambassador again. This whole process was very dangerous because I could be stopped and asked what I was doing in a “diplomatic” car and, if it had been found out, especially as a nuclear engineer, that I was dealing with capitalists, it would have been the end of my career for life on the spot, instantly, finished, done.
XL: Wow.
SK: There’s no question about it, if not worse.
XL: But you eventually left Russia and got married.
SK: This correspondence between Jenny and me took place for nearly nine years, until Gorbachev’s time came in 1989, and for the first time I was able to get a permit to leave. It took a year to get a passport, and by 1990, I traveled alone to Jenny. I arrived in England with two bags, enough for maybe a month to see her. I never went back.
XL: And here you are. That’s a great story.
SK: So I started all over again at that time, with two bags and £100 in my pocket.
XL: Your first job in London was as a translator, because you spoke both Russian and English, right?
SK: Well, first, trying to find a job wasn’t easy. My English – it’s not perfect now, but believe me, it was further from perfect then. My first job in London entailed me delivering letters for a few months – I’m not the type of person to sit on Jenny’s back, if you know what I mean.
XL: How did you get the translator job?
SK: I got a job as an interpreter for a natural resources consulting company. They needed bilingual people, and, well, I wasn’t bilingual [laughs], but I helped them translate some technical reports to analyze the oil fields. I was the worst interpreter, by all means, but after awhile, one of the directors, Roger Smart, invited me for dinner. We talked and he asked me about my background and things like, “Who are you... what you are doing here,” etc. So I explained my situation to him, and he asked if I would like to stay and do something together. I said I would love to, especially after delivering magazines! [laughs]
And that’s how it started. We basically started working as consultants to other companies. And I said, “Roger, I have friends in Kazakhstan, why don’t we try to do something ourselves?” At the time, I had no idea how to spell “oil,” even though it’s a short word! But during the process, we found some oilfields in Kazakhstan, and my very first deal was a couple of small oil fields there. It took me a couple of years, but I learned a lot about Kazakhstan – I learned how the system worked and pioneered the whole thing. Then Yorkton Securities, which of course Frank Giustra was chairman, decided they wanted to enter the mining sector in the former Soviet Union.
XL: When was this?
SK: This was about late ‘93, ‘94. One of my colleagues, Bert Kennedy, asked if I would be interested in doing something in Kazakhstan with Yorkton Securities, and I said, “Of course!” So that’s how it began. We met with Tony Williams and they liked the idea. They sponsored us, and I started working in Russian Kazakhstan to find gold and copper-gold projects. It was quite hard, because the laws were still being established in both countries, so we ended up with two companies. One was Frank Giustra’s, of course, and he helped us float them all on the Toronto Stock Exchange. It was called KazMinCo, which later became European Minerals Corporation, and later Orsu Metals Corporation. The other company was Arian Resources Corporation, which was later taken over by Bema Gold, and this is how I got very close to Bema because of its Julietta Project in Magadan, Russia.
XL: And Varvarinskoye.
SK: I originally brought the Varvarinskoye project into the company in 1995. And now, many years later, it is now a producing gold and copper project.
XL: So you secured all those assets in Central Asia, but –
SK: Yes, all the assets for European Minerals, and a couple of others perhaps, I definitely secured them.
XL: Yes. But what do you see as the main reasons for your success? How were you able to accomplish all this with your limited knowledge at the time?
SK: Well, there’s a number of reasons. First of all, I think it was right person, right time, right place, you know?
XL: Sure.
SK: But really, I was early, and that’s very important. I was early with the Western companies. I’m also quite a communicative person, you know what I mean? It’s just part of my character. And another very important factor is understanding both mentalities. I cannot say I fully understand Canadian or British or American mentality, but I think to a very large extent I do, when you take into consideration my wife is English, etc. What I’m saying is, it’s vital to understand the rules of engagement, understanding how things get done, and what makes people tick.
XL: Yes.
SK: Another very important factor is keeping your word and being honest with people, whatever it is, whatever you agree to do. And whatever I do, whether it be in Russia or in Kazakhstan or in the West, wherever it is, people know that when I give my word, I mean it, I mean it.
XL: That’s great, Sergey. People can count on you.
SK: Unless it’s a real force majeure or something I physically cannot implement what I promised. But my wife knows, she always says to everybody: “If Sergey said so, he will kill himself, but he will do it.” Otherwise you cannot do business. We have old saying in Russian, and I sincerely believe in it: “One who lied once would not be trusted again.” It’s much simpler in Russian, but the meaning is like this.
XL: How is doing business in Central Asia different than doing business in the West? Can you contrast that for us?
SK: Kazakhstan is, by far, the country I favor out of all of the former Soviet Union states to do business in – it’s stable, reliable, clear, and manageable. There’s no question for me that it’s the best country in the former Soviet Union to do business, no question. Remember that Kazakhstan never really existed as a country – it was mostly nomadic tribes of different clans. It was created only by the decree of Lenin in the Soviet Union. So I think the country has done remarkably well to come to the status where it is now. I know some people say negative things about their president, but I think that for Kazakhstan’s sake, God bless and long live Nazarbayev, for Kazakhstan and for Kazakhs. It’s a huge country by territory and has huge resources, but it has only 15 million people, like Holland, can you imagine? And it’s very rich; oil in the west and mining in central and eastern Kazakhstan, along with uranium, copper, gold, coal, lead, zinc, you name it. What I’m trying to say is that the laws and the implementation of laws in Kazakhstan are definitely much more advanced than in my motherland. I’m talking about Russia.
XL: Their laws are more advanced than Russia’s?
SK: No question about it. And what’s interesting is, I had a few people wonder how I can hope to develop Oriel Resources’ Voskhod project when I am “small boy,” a junior company, with a neighbor who wouldn’t want any competitor next to them – a big multi-billion-dollar company that won’t allow you to build something under their nose. They will squash you and spread you like butter on the bread! But we built the Voskhod chrome mine, and Oriel Resources will be cutting the ribbon to the plant next week. So we’ve been successful. As long as you implement your contract with the government and do what you promised to do, this is the law of operation in Kazakhstan, yes? I don’t know any cases recently in Kazakhstan where legitimately operating mines lost their title or anything like this. Not one case.
Believe me, I know. I have a lot of partners and people trust me. I have met people from Nazarbayev, two prime ministers in Kazakhstan, and I know a lot of people in Kazakhstan. They know if we promise to do something – build a plant, spend a certain amount of money, do exploration – we will do it. And if we cannot do it, we’ll approach the government and say, “Guys, you know, we are doing our best, but we need another three, four, five, six months,” and they help us.
XL: You’ve been involved in a lot of asset negotiations and developments, but do any of these stand out for you? Are there any you’re particularly proud of or is there an interesting story you’d like to tell us about all the developments you’ve been involved in?
SK: Well, one of the stories would obviously be Kupol, until I got into uranium with UrAsia. That was by far the most difficult deal I ever had.
XL: Kupol was?
SK: Yes.
XL: What made it so difficult?
SK: Well, when Arian was taken over by Bema, Clive Johnson put one condition on it, that I stay with Bema. Obviously he was very nervous going into Russia and knew nothing about it – maybe like some North American people are scared of Russia. It took us two years to complete all the permitting to develop Julietta. I was heavily involved in securing all the permitting and a lot of things Russia allowed us to do were, in many cases, the first instances of it ever happening. I loved doing business in Russia then – I don’t have any business at the moment in Russia, so that tells you something, yes? But at that stage, I loved doing business there. I think the mood was right, the people were very helpful, the government was very helpful, everybody. The minister of finance and chairman of the central bank helped us with the licenses – I don’t think you would get that now. Anyway, I knew Julietta would be built, so I said to myself, what’s next? I spoke to one of the senior people, and I said “Look, I’m done with this project, everything is complete, so any new ideas?” I am always looking forward. And he said “Sergey, I think I have just the right thing for you.” And he drew on a piece of paper the Kupol site, which was 3 million ounces at that stage with 30 grams per ton, open pitable, from only a few drill holes. I said, “Get out of here!”
XL: 30 grams gold per ton?
SK: Yes, 3-0 grams. Open pitable.
XL: Wow.
SK: That was the origin of Kupol. Well, I said, “Get out of here! Don’t lie to me!” He introduced me to the governor of the area and I went to see him, had a chat. We started talking and he liked me, so we made a deal. I showed the data to Tom Garagan, the VP of Exploration, and he said, “Sergey, it cannot be.” But I showed him the drill results, the cross-sections, everything. Tom just shook his head and said, “Sergey, I’ve never seen anything like it, let’s go for it.” But then Roman Abramovich won the election. So I said. “Clive, I would not move in there.” In those days, the oligarchs were very powerful, and Roman was very powerful person. So I basically said, “I want his blessing. He’s the governor and I want his blessing to operate in this area and that he will allow us to work and do business properly.” So the senator arranged a meeting with Roman, and I went to his office, very posh, and we spent 35-40 minutes talking for the first time. He said, “Okay, Sergey, but we would want to participate in the project.” This of course scared me, because I’m not sure I understand the meaning of the word “participate.”
XL: Exactly!
SK: And then, oops! I find out I have a lot of other people interested in the project. Like Barrick and Highland Gold. And that scared me. So that started the competition, and it took over six months because the government of Chukotka wanted to be a participant. So we were negotiating, doing economical models, and then I remember I wrote a big letter to the governor, saying why we will be better than anybody else – we have operations there, we already built something there, we are a Canadian company, etc. So eventually we agreed to a 75-25 split – we kept 75% – and that was such a brilliant deal. And we did it when gold was $270 and people were saying gold would never cross the $300 barrier.
XL: That took guts, but it obviously paid off. Okay, let’s talk about Oriel. First, what attracted you to join them?
SK: I originally thought Oriel would be another Bema for me. It was Steven Dattels who was the original creator of this company. Tony Williams introduced me to Steve Dattels. By now gold was coming back, and Steve wanted to get involved in the former Soviet Union. I thought I would just help them bring in projects and be a consultant in Russia, Kazakhstan, whatever. And then this nickel project came around, so Steve calls me and asked if I wanted to be chairman of the company. I said “Steve, that’s a bit of a different angle to the whole story.” Then Paul Reynolds of Canaccord called me and said, “Sergey, I think you should do it. You’re the right age, and your experience would help.” I thought about it for a week and talked to my wife because it would change my life completely. So that’s how I agreed.
But the thing is with me, maybe it’s upbringing, maybe it’s background, but when I do something, I do it with a full heart and responsibly or I don’t bother, you know, I stay at home. So when I came back to Steve, I said, “If I’m ultimately responsible, I have to control the whole situation.” Is that good or bad I don’t know, but that’s a separate issue. I’m not a miner, I’m not a geologist, I understand a little bit of it, but my thing is the vision, you know, where we’re going, how we’re going to get there, and having good people in the team. I have a lot of advisors, a lot of consultants. But it took me a while to assemble a good team in Oriel, a couple years.
XL: You’ve admitted there were mistakes there, so what would you do differently that you think our readers could learn from?
SK: Well, I don’t really want to go into too many details because I don’t want to say anything negative about my original partners. But I would have structured it a different way because the company was overpriced to begin with; there were a lot of previous financings in the company. If I had to start a company from the very beginning, I would be very careful whom I invite in as co-partners, you understand what I mean, whom I start it with and who has stock in the company.
XL: How were you able to secure the financing alliance with the Russians to move the project forward to a point where you got a $1.5 billion buyout?
SK: Well, it wasn’t really secure. What happened is that we originally had a big, major nickel project, but Oriel was really quite small and the stock was not doing very well. I had a very good technical advisor on the ground, Nick Barcza, my chap from Mintek, a top expert in the industry, knows everything and everybody. And he said, “Sergey, if you want to be diversified for stainless steel supply, you must develop into a ferroalloy supply company.”
Coincidentally, we had also acquired a wonderful chrome project, and we approached its development very aggressively because it’s not as expensive as nickel to develop. We wanted to put something in production quickly, and we could do it with our Voskhod chrome project. We carried out feasibility and financial studies, completed full construction, and put it in production in three and a half years. I mean, this is unheard of.
So we had this project, but the stock was still not doing very well. Then Alexander Nesis, a successful Russian businessman who created Polymetal, approached me and said, “Sergey, I have this ferrochrome smelter nearly completed in St. Petersburg. I have the financial strength – you’re weak, you can’t do this, so what about a merger? We can do this together, you know, expand.” I was in a mixed situation; my stock was £0.23 to £0.25, so it seemed to be a very good idea at the time. Perhaps, if I had done it again, I would have negotiated a better position for myself, but at that stage the chrome price was different. One has to always look at the situation at that moment in time. If I’m looking back, I could say I could have done better, but then you never sell your shares at the peak, right?
XL: Right.
SK: But I think we’ve done brilliantly for the company. I’m very glad. We eventually built a good company. And Voskhod is definitely a good project. Sometimes people tell me I should be more on the road. I say, “I’ll go on the road when I have something to say!” I don’t like to go on the road and wave my arms, do you understand what I’m saying? I believe in fundamentals and that’s what I’m trying to do now in Orsu and what I tried to do in Oriel. You can promote the company only so much. But if you have the fundamentals, if you have a resource and an operating company, you will be rewarded. But if you just go on arm-waving or whatever, people will believe you once, maybe a second time skeptically, but there is no third time. So I believe in fundamentals, and if you have fundamentals, you will get it.
XL: Very good. What was the impetus behind the merger between Lero Gold and European Minerals?
SK: Lero Gold didn’t have enough money, and we were in a part of the cycle where I believed sincerely that in order to survive and be successful, you have to have something more advanced than just exploration properties. And then, of course, I know Kazakhstan like the back of my hand. And there were a lot of people, including Paul Reynolds and Endeavour, who were saying, “Sergey, look at European Minerals, this makes perfect sense.” And so Paul Reynolds started trying to broker the deal with Endeavour.
So Endeavour was sort of on the opposite side – funny, but somebody had to be. And they did a proper job because I actually had an argument with some of the Endeavour guys, because they were doing a very good job on behalf of European Minerals! But we did it and we merged. They needed money, which was difficult at the time for them to raise. After I sold Oriel, it took us two days with Canaccord to raise all the essential money to basically bail EMC out and pay their debts. So that was the merger, and we did all the paper merger on a one-to-one basis. I think it was complimentary to both sides. And it was important in this whole scenario that I had a little gold, still have all my management, not all of them, but everybody who I thought would be a) suitable, b) appropriate, c) worth it. I even kept the office. So it was the smoothest ever possible transfer from one company into another. And it was all within a period of three or four months – selling Oriel, raising money, doing the merger, starting “straight from the wheels,” as we call it.
XL: That’s impressive.
SK: As I said, I’m very straightforward and maybe too much. I go like a ram, I don’t go behind you, you know what I mean? I will do what I promise you. If I don’t do it, crucify me or whatever you want to do. But I do what I tell you I’m going to do, and so far it’s worked.
XL: That’s great, Sergey. Tell us about your involvement in UrAsia.
SK: UrAsia was basically the creation of Paul Reynolds. Frank Giustra approached him, then Paul approached me. Basically, the three of us sat down and I said, “I will help with raising money.” I went to the minister of geology, whom I knew and I said, “Look, I want an introduction to Mr. Dzhakishev, president of KazAtomProm. I have a very powerful group that would be interested in getting involved.” Uranium was on the up, and so he introduced us. We came with a very big delegation, very respectable, with bank representatives, Canaccord representatives, Frank, myself, Philip Shirvington, Ian Telfer, and other people. So it was a pretty impressive group. The first time we met, we said that we would be interested in doing this as we’ve done many things in the past, etc. I was involved from the very beginning, but it was the three of us – me, Frank and Paul. Of course my partners in Kazakhstan helped me a lot, too – Philip Shirvington and Ian Telfer.
XL: Frank Giustra is certainly a mover and shaker in the industry.
SK: Frank is an ideologist and he’s very impressive in negotiations. He knows how to speak. I am like Frank’s friend now these days. We became close on this deal because we flew on his big plane twice, just the two of us. We were so nervous, it was so complicated. We were small boys, competing against Areva and Mitsubishi. But we won!
XL: Yes, you did.
SK: But I have a couple of words how you approach business generally. Whatever business I’ve done, I’ve never bought it from somebody or taken it. I started business from scratch – Julietta, Kupol, Varvarinskoye, you name it. It’s not like I took something from somebody. I built everything myself. Do I make sense?
XL: Yes, very much so. You’ve been very positive in your comments about Kazakhstan, doing business there.
SK: Kazakhstan, yes, because I don’t know one bad piece of news from Kazakhstan. I mean, it’s much more advanced legislation, very advanced legislation, and it’s very clear when you have a contract with the government. And if they change legislation, your document prevails – they may have to adjust it, but you don’t lose anything economically. So you negotiate with the government and as long as you implement it, you’re okay. Kazakhstan is more advanced than Russia. Kazakhstan is very stable, there’s a very clear structure of government. It’s quite a small country, so if you have a disaster, you always can come and find who is actually responsible and who has a final say.
XL: I wish more governments were like that.
SK: As long as you act in accordance to the law, don’t break the law, and if you’re trying, if you’re doing it, I think they will understand. If you’re doing nothing, only making promises and arm-waving, then that’s another thing. But if you’re doing it and something is wrong, people always will help you. That’s what I experienced so far.
XL: You’re mostly focused on Orsu now, is that right?
SK: That is correct. I do not stop myself if I see something interesting, but at the moment I want to make Orsu succeed. As I said, it’s a lot of work. As soon as Varvarinskoye starts operating normally and giving whatever revenues it gives, then the people will see the blue sky, what the future is. But at the moment, we are continuing with our exploration, we are progressing our pre-feasibility studies here, and expanding our gold-copper porphyry. But the priority is Varvarinskoye, because that’s how we would be judged and that’s what gives us revenue, gives stability to the company, especially in the environment we are in. And I believe in gold, I believe in gold for the following couple of years, for sure.
XL: Orsu is producing gold now?
SK: Yeah, we are producing gold and copper. We are, at the moment, at about 80% of nominal capacity. And don’t forget, we’re running copper in two and a half months. It was delayed, but we are ramping it up.
XL: Sounds like Orsu is on its way to big things.
SK: We have like close to a thousand employees altogether in Kazakhstan, so it’s quite a big operation. I’m positive. I mean, you see I was buying the stock, but when it go down, I buy more! I sincerely believe in the company, so I’m not overpromoting it. I believe in it, otherwise I wouldn’t be doing it. I don’t need it, but I like doing it and I want to make it a good company. I believe that it should be a billion-dollar company, that’s my plan.
XL: What’s your take on gold selling off? [Ed. Note: the interview was conducted when gold was in the mid-$700s.]
SK: It’s a general crisis, and people are panicking. I think they’re selling everything, they want to be liquid. I think it’s just general panic, just the general financial panic. I think gold will go much higher, I sincerely believe in it. I believe in fundamentals and in the laws of physics as a physicist, yes? And I believe the dollar doesn’t have any fundamentals behind it. So I think the dollar will go further down because of things like the bailout. This obviously means they will press the “on” button of the printing machine, yes?
XL: Yes, it does.
SK: And well, what will it cause? So far, we have seen a more or less perfect correlation between the dollar and gold; one goes up, the other goes down. At the moment, I don’t know which currency to be in. I mean, I don’t know which currency is safe.
XL: I like the gold currency!
SK: Well, so do I!
XL: As far as stocks, there are a lot of investors who’ve put a lot of money into the juniors and have lost money and they’re worried. Some are panicking and selling. Is it over for the junior market, or do you see this as a buying opportunity?
SK: I think it’s a super-cycle by amplitude. Money was so cheap, so free, so easily accessible, therefore the punishment will be harder, you know? For the time being, we will have difficult times. How long? I have no clue, I’m not an expert, unfortunately. Is it a buying opportunity? Maybe even not yet, maybe it will fall further down. But the thing is, one has to be very careful what he’s buying. What I’m saying is that people who burned their fingers on something will be scared of everything for the time being. But then eventually, it turns back. I believe the market will turn back. As we see, gold is already up, and I think it goes further.
XL: Very true. I think your positive attitude has helped make you successful.
SK: As I said, I am an optimist and I think that helps generally in life. I think it’s very important to believe in what you’re doing. I am an optimist, I’m repeating it, so that’s very important.
XL: Thank you for the great interview, Sergey, and we’re glad you agreed to be part of the Explorers’ League.
SK: Thank you. And God bless you.
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