Jewellery prices jump by 20.1% year on year on average in Kazakhstan, by 50% in Astana.

Kazakhstan produced 40.7 tonnes of unrefined and semi-refined gold or gold in powder in January-July. This is 21.5% more than in the same period of last year, when output was increased by 29.6% year on year.

Steady growth has been recorded in the past few years. The 2015 output was more than 26.6% than the 2014 one, whereas growth was 18.3% year on year in 2014 and 6.6% year on year in 2013. This trend continued this year.

Out of 40.7 tonnes, 20.4 tonnes of gold was refined, a 16.5% growth year on year.

The mining sector increased output of gold ore by 1.4% year on year to 10.6m tonnes in January-July 2016 and that of gold-bearing concentrates by 7.9% to 31,400 tonnes.

Events: According to a half-year statement by Polymetal International PLC, changes in macroeconomics and the financial market in the first half of 2016 created favourable conditions for gold.

The price of gold stood at $1,321 per ounce at the end of June, up by 25% compared to December 2015. Since the EU debt crisis in 2010-2011 this is the highest half-year growth for gold. At the beginning of August gold prices passed through the $1,360 per ounce mark for the second time in 2016, while this level of prices was last recorded at the beginning of 2014.

Regionally, almost 95% of production is located in Akmola Region (14.8% tonnes in the first seven months, a 46.6% year on year), East Kazakhstan Region (13 tonnes, down by 5.2%), Astana (5.8 tonnes, up by 57.5%) and Karaganda Region (4.7 tonnes, up by 38% year on year).

Events: on 1 August 2016, after obtaining all necessary permissions from the regulators, Polymetal completed the acquisition of Orion Minerals LLP, which owns a licence to develop the Komarovskoye gold field in Kazakhstan, from Kazzinc, a subsidiary of Glencore PLC. The deal cost $100m. In addition, Kazzinc will receive a deterred payment which will depend on future output at Komarovskoye and gold prices. The deterred payment, which will not exceed $80m, will be calculated quarterly and paid at the price of gold above $1,250 per ounce.

Probable reserves at Komarovskoye, according to JORC, are estimated at 14.2m tonnes with an average content of 2 g/tonne, ie 0.9m ounces of gold. Resources (in addition to reserves) are estimated at 9.8m tonnes of ore with an average content of 2.2 g/tonne, ie 0.7m ounces of gold.

Polymetal has been working in Kazakhstan for a long time. In 2009 the company acquired its first asset – the Varvarinskoye field (with reserves of 1.5m ounces) where production was launched in 2007. In 2014 it acquired the giant Kyzyl project, which includes the Bakyrchik and Bolshevik gold mines with combined reserves of 7.3m ounces where large-scale construction has already been launched. The work focuses on external infrastructure and digging to prepare the sites for building refining facilities and auxiliary buildings. The construction is underway in line with schedule; the first batch of concentrate is expected to be produced in the third quarter of 2018.

Capital expenditure (capex) at Kyzyl totalled $34m in the first half of 2016, and mostly consisted of contracts to supply processing equipment. The company also continued to invest in geological exploration. Capex on geological exploration totalled $19m in the first half of 2016 against $25m in the same period of 2015 and focused mostly on the Kyzyl and Olcha fields and deposits of platinum group.

^{The analysis is based on material published by www.polymetal.ru, www.vedomosti.ru, www.inform.kz.}

The retail price of jewellery items increased by 20.1% year on year to KZT13,500 per gram in Kazakhstan at the end of July.

The highest price and fastest annual growth among Kazakh towns and cities were recorded in Astana – KZT18,800 per gram, a 50% growth year on year.

The cheapest price of jewellery was recorded in Shymkent – KZT12,600 per gram, up by 23.9% year on year.