DUSHANBE, January 26, Asia-Plus - The Ministry of Finance (MoF) intends to conclude forward contracts with gold-mining companies operating in Tajikistan in early February.  

A forward contract is an agreement between two parties to buy or sell an asset (which can be of any kind) at a pre-agreed future point in time. Therefore, the trade date and delivery date are separated. It is used to control and hedge risk, for example currency exposure risk (e.g. forward contracts on USD or EUR) or commodity prices.  

One party agrees to buy, the other to sell, for a forward price agreed in advance. In a forward transaction, no actual cash changes hands.  If the transaction is collaterised, exchange of margin will take place according to a pre-agreed rule or schedule.   Otherwise no asset of any kind actually changes hands, until the maturity of the contract.   

A source at a MoF said that information about a volume of gold purchased and its price is a secret information.  “However, one may say with confidence that less than a half of gold mined in Tajikistan comes to the public purse because the government does not have enough funds to purchase more amount,” the source said, adding that the gold mining companies operating in Tajikistan may sell their product abroad only after the government refuses to purchase it.

According to the source, the forward contracts concluded last year proved to be profitable for the government, despite increased prices of gold.  “By the end of 2006, the price of oz (31.1 grams) of gold had exceeded $700 however, we stood to gain because the contracts were concluded in early 2006 when a cash operating cost was $547/oz,” the source said, adding that experts expect the cash operating  cost to reach $800/oz this year.  

According to the MoEI, Tajikistan last year produced 1,730 kilograms of gold, which 530 kilograms more than in 2005.    

Tajikistan has 28 known gold deposits containing an estimated 429.3 tons of gold. The country produces on average not more than 2 tons of gold per year, most of which comes from the Jilau deposit operated by the Tajik-British JV Zeravshan Gold Company (ZGC) working in northern Tajikistan.  The other gold producer is JV Darvaz that produces gold from its alluvial operation at the Yakhsu deposit, located in the Khatlon province in southern Tajikistan. It reportedly has proven reserves of around 25 tons of gold. The Darvaz joint venture includes a 49% interest from UK based Gold and Mineral Excavation.  The third joint venture company developing Tajikistan’s gold potential is Canadian Gulf International Minerals, which has a 49% interest in the Aprelevka joint venture in the Sughd province.