INTERVIEW: Kazakh gold miner AltynGold on a roll

INTERVIEW: Kazakh gold miner AltynGold on a roll
Exclusive Q&A with Altyn Gold CEO Aidar Assaubayev, covering the company’s history and some of the challenges its owners have faced along the way.
By Theo Normanton in Moscow November 29, 2021

London-listed gold miner AltynGold with assets in Kazakhstan reported strong first-half results, with revenue doubling year on year to $23mn and a net profit of $9.3mn for the period, compared to a loss in the same period a year earlier. bne IntelliNews sat down with CEO Aidar Assaubayev to delve into the company’s history and discuss some of the challenges its owners have faced along the way.

Assaubayev was born in Almaty in 1978, the son of an established mining entrepreneur Kanat Assaubayev and his wife Marussya Assaubayeva. He shared in his father’s interest in mining from a young age and graduated from the Kazakh State Technical University with a degree in Engineering and Economics in 2000, later continuing his education with a doctorate in economics from the Moscow State Institute of Steel and Alloys. In 2012, together with his family, he purchased AltynGold Plc, which has been built into a successful business. Aidar is now based in Almaty, where he lives with his wife and children.

bne: Your family has now been in control of AltynGold for almost a decade. What was it that first attracted you to the company and convinced you it was a great investment?

AA: We acquired AltynGold, or Hambleden mining as it was then known, back in 2012 via a public offering to the company’s shareholders. At the time, the company’s outlook was rather dire. Alongside being embroiled in a legal dispute with the Government of Kazakhstan over a cyanide leak at one of the company’s facilities, it was also in financial hot water after the European Bank for Reconstruction and Development had frozen its credit line. On an operational level, the company’s gold reserves were also almost depleted thanks to a previous decision to use it as an open pit mine.

Yet despite these challenges, we saw huge potential in the company and were confident that our experience would afford us the knowledge and insights necessary to turn it around. After we assumed control, we were able to quickly resolve the legal dispute by working in line with authorities to fix the environmental damage and invested heavily in the company’s facilities to ensure a similar incident would never happen again. On the operational side, our exploration focus moved underground where the long-term potential of the company lies. We were able to increase reserves significantly and successfully transition operations from open pit to underground mining which resulted in significantly increased annual production. I am delighted to say that the early potential we saw in the company was not misplaced, and that we are now on track to produce 1mn tonnes of ore and 60,000 ounces of gold a year by 2025.

bne: You mention that your family already had experience in the mining industry prior to their acquisition of AltynGold. Could you expand on this and give some background on how the Assaubayev’s moved into the industry?

AA: The mining industry was always a natural fit – my father Kanat Assaubayev was the first Kazakh to receive a doctorate in metallurgy, and prior to starting his business career, enjoyed a successful career in academia as Chairman of the Kazakh Polytechnic Institute’s Metallurgy and Mining Department. In the 1990s, as Kazakhstan began establishing its new post-Soviet economy, a plethora of new business opportunities emerged which encouraged him to leave academia to pursue entrepreneurship. These initial ventures, which included selling imported cars and electronics, my father’s consultancy mandate in the main state bank, proved very successful and (supplemented by a bank loan and the proceeds of my mother’s pharmaceutical business), were enough to purchase the production facilities of what would later become known as KazakhGold. This proved a hugely valuable learning experience, teaching us how to develop a profitable company from the bottom up. We bought it in a state of complete disrepair – following the company’s bankruptcy, its mines were inactive and machinery entirely worn out – and I remain incredibly proud of what we were able to achieve by reconstructing the facilities and upgrading the mining and processing operations. By taking this flailing company and turning it into the first privately-held Kazakh company to be listed on the London Stock Exchange, we gained the experience needed to make our future pursuit with AltynGold a success. Fortunately, my siblings and I have always shared our father’s passion, and individually pursued study in the field prior to entering the family business.

bne: What role does the family play in the day-to-day running of the business?

AA: Our family has always played an important role in the everyday operations of AltynGold. As CEO, I have been responsible for overseeing the company’s strategy and managing its day-to-day business operations since 2013, while my father and younger brother – Sanzhar Assaubayev – currently serve as Chairman and Executive Director, respectively. We have always considered our family’s involvement in the management team as beneficial to our success, as not only does it guarantee a high level of trust between key decision makers, but it also maintains business continuity by ensuring my father’s passion and industry knowledge remain in the company for years to come.

My mother, Marussya Assaubayeva, was also a strong businesswoman and devoted philanthropist. The values that she fostered within her children and extended family have also had a significant impact on the company’s culture and ethos.

bne: What hurdles have you faced as a Kazakh company attracting investment abroad?


AA: As with any successful company operating within the CIS and the emerging markets generally, we face a significant amount of scrutiny from international investors.    We endeavour to comply with the highest levels of ethical behaviour and transparency in our dealings.  Nevertheless, like many of our peers, we from time to time have to deal with baseless allegations and frivolous claims.

Among the most egregious accusations we have received in this regard was that our family had embezzled money from Kazakhstan’s United National Pension Fund (UNPF). The reality of the situation was far from this. My brother, Bauyrzhan Assaubayev, had helped two former business partners to secure more capital for their business MegaTransAsia by personally guaranteeing a loan they had taken out with ATFBank. Immediately after the loan was restructured and the new funds injected, it came to light that these two individuals planned to withdraw the newly acquired funds by setting Bauryzhan up. Using the company HomeBroker, they raised a claim against MegaTransAsia’s loan liabilities to ATFBank and demanded repayment of the loan from Bauyrzhan. HomeBroker then issued bonds on the Kazakhstan Stock Exchange where one of the private pension funds (which later merged with the United National Pension Fund) acted as an investor. After HomeBroker ultimately defaulted on its bonds, the right to third party liabilities to HomeBroker then passed on to the UNPF, leading them to continue the legal case against Bauryzhan. We have won all recent trials with the UNPF and are confident that we will be able to conclude the legal case soon.

In our view, the best way to dispel these stereotypes and assuage any associated concerns is to ensure that we are as transparent as possible in our business proceedings. This has always been a priority for us and remains a strong focus for us going forward.

bne: Speaking of controversies, one of the largest and most public disputes you faced was with Russian mining firm Polyus over a decade ago. In your view, what instigated this dispute and how does your relationship stand today?

We sold KazakhGold to Polyus back in 2009, after lengthy discussions with Polyus’ then controlling shareholders over our shared vision of the global market and plan for collective growth. At the time of the sale, we were confident that Polyus was the right buyer and had even gone so far as to turn down other, more lucrative offers to ensure the deal went through. Shortly after the transaction had been finalised however, changes were made in Polyus’ management team that impacted the company’s strategy and moved them away from the growth trajectory that we had previously agreed upon. We understandably felt blindsided by this, and upon contesting it, were met with a lawsuit from Polyus that attempted to force us to back down. Once a legal dispute begins, it tends to take on a life of its own and aggressive legal moves were subsequently made on both sides.

It is important to note however, that at no time did the UK High Court find us guilty of wrongdoing, nor did the UK FCA or other regulators bring any charges against us. Ultimately, we were able to come up with a settlement that proved satisfactory for both sides, and as part of this sold KazakhAltyn (KazakhGold’s operational company) in 2012. We bought Hambledon Mining (now AltynGold Plc) shortly after, and have focused our efforts on this venture for the last nine years. Our relationship with Polyus is now satisfactory, and in recent years we have even discussed the possibility of pursuing several business opportunities with their team.

bne: What are your long-term business goals for AltynGold in the years ahead?

AA: Our goal is to use our expertise in mining and natural resources effectively, by pursuing a diversified portfolio of projects across the mining and oil & gas industries. Beyond this, we are also actively working to attract foreign investment into Kazakhstan and Central Asia via portfolio flows within international capital markets as well as JVs with strategic partners. We are also very keen on local economic development by creating jobs in the regions (as it stands, over 60% of our employees are local residents of Kazakhstan’s Glubokoe district). We believe that Kazakhstan is an undervalued and often overlooked market, but one with huge investment potential for those willing to take the time to understand local nuances.