THE story of how Sergey Kurzin, a Moscow-trained nuclear-power research engineer, came to be running two listed exploration and development companies from an office in London is full of romance and intrigue.

It started in 1981 when he was still a fifth-year student and he met an Englishwoman, Jennifer, while they were travelling on Moscow’s underground railway. She had just graduated. The attraction they felt was so strong that they were determined to keep in contact when she returned to the UK.

This was extremely difficult. The Cold War was still being waged. And, as someone involved in the Soviet Union’s nuclear industry, Dr Kurzin was absolutely forbidden to talk or write to foreigners except under very strict supervision.

However, the couple worked out a scheme worthy of any espionage agent – helped by a contact who was an Icelandic diplomat using Norway’s Moscow embassy diplomatic mail.
At pre-arranged times and places, Dr Kurzin would hand over to the Icelandic diplomat his letters to Jennifer. They would go via diplomatic pouch to Norway for onward posting to London. Jennifer’s messages to Dr Kurzin followed this convoluted route in reverse.

In 1990, during the period of glasnost and a thawing of the Cold War, Jennifer invited Dr Kurzin to visit London. He arrived in the UK with nothing but a suitcase containing a few belongings.
Today, he is married to Jennifer, and they have two children. He has dual Russian-UK nationality and, on paper at least, Dr Kurzin is worth a few million dollars, partly because of his own, natural entrepreneurial talents and also because he has helped Western companies to obtain and develop some substantial mineral assets in the former Soviet Union (FSU).

Dr Kurzin’s father was an academic scientist who brought up his son in a Russian town devoted to academic study – it was actually called Academytown. Consequently, says Dr Kurzin, many of his childhood friends are PhDs and now work all over the world.

Operating from the UK, he has also developed long-term friendly relationships with many Russian geologists. “They help me and they trust me.” And, he adds forcefully: “I have never paid a penny in bribes.” He worked for seven years as a research engineer – in Moscow, Hungary and East Germany – and, in parallel, worked on his PhD thesis which he completed at the Moscow Energy Institute. “So my PhD was based on real industry experience and experiments.”

Dr Kurzin was awarded his PhD in applied nuclear physics in February 1990, and arrived in London the following November.

In 1991, he managed to get a job as a translator with Exploration Consultants (ECL), which was involved in the oil business in the FSU. After two weeks, Dr Kurzin became one of the consultants – “even though all I knew about oil at that time was how to spell it”.
Nevertheless, he had friends in Moscow who knew about oil in Kazakhstan, and eventually licenses for three oilfields in that country were obtained. In the process, Dr Kurzin learned a great deal about how to operate in Kazakhstan and established contacts there.

In 1994, Dr Kurzin became a co-founder of Arian Resources. This was at the instigation of Tony Williams, a geologist who was then head of Yorkton Securities’ natural resources group in London. Mr Williams wanted to become involved in Kazakhstan and Russia because they were opening up their natural resources to Western investment and development.
Dr Kurzin and Mr Williams also formed Kazakhstan Minerals Corp (KazMinCo). And an investment company, Dragon Group, was established to manage Arian and KazMinCo, and to make other investments.

Bert Kennedy, an economic geologist and a colleague at ECL, also moved to these new ventures, as president. KazMinCo subsequently changed its name to European Minerals where, today, Mr Williams is chairman and Mr Kennedy is chief executive.
Via Dr Kurzin’s wide network of contacts in the FSU, the group was approached by Yuri Radchenko, who held the licence to the Julietta gold property near Magadan in Russia’s Far East. But he couldn’t raise the finance to explore and develop it properly.

A joint venture was formed and a feasibility study completed for the Julietta project, but after 1996, with the gold-mining industry in deep recession and investor sentiment towards Russia at rock bottom, Arian could raise no more money to build the mine. So Arian was sold to Bema Gold. Dr Kurzin says that Clive Johnson, Bema’s chairman, president and chief executive, was nervous about the Russian venture, and asked him to become directly involved. So Dr Kurzin left Dragon to set up his own consultancy, SJK.

 

Other clients included Ennex International, Consolidated Puma Minerals (a separately-listed offshoot of Bema), Zincox and European Minerals. He was responsible for securing, among other assets, the Varvarinskoye copper-gold project for European Minerals.

Dr Kurzin spent months in Moscow negotiating for licenses and arranging that dollars raised from gold sales could remain in London. He says: “We did much pioneering work – for example, we won the first waiver from Gokhran (the Russian state treasury) to allow a mining company to sell gold and silver directly to commercial banks rather than to the central bank. “The financing of Julietta was eventually completed in 2000. Dr Kurzin points out that Julietta was one of only three gold projects in the world financed that year.

Bema also owns 75% of the Kupol gold project in Russia’s Chukotka region. Dr Kurzin says he learned about Kupol, discovered in 1995, from a Gokhran contact.
At first, Bema could not believe how high the grades are at Kupol. The company now reckons Kupol should be in production in mid-2008, with scheduled annual output of 550,000 oz of gold and 5.8 Moz of silver, at an all-in cash cost of US$88/oz for the gold, over a mine life of six-and-a-half years.

In 2004, Dr Kurzin was invited by Stephen Dattels, an entrepreneur who was previously involved in several natural-resources projects, to join Oriel Resources. “I took a week to decide because I was pretty comfortable doing my consulting work,” Dr Kurzin recalls.

Oriel listed on London’s AIM market in March 2004, after raising more than £40 million, and on Toronto’s TSX Venture Exchange in February last year. After Oriel was listed, Mr Dattels resigned for personal reasons, and Dr Kurzin is now the company’s executive chairman.
It has not been a completely happy experience so far. Shares in Oriel, sold at the listing for £0.65/share, lost more than half their market value. But recently they have recovered strongly. Dr Kurzin says: “If I was starting out again, I would do it differently. There were mistakes.”
He assembled a portfolio of five properties for Oriel, and is focusing on two projects in particular: Voskhod chrome and Shevchenko nickel, both in Kazakhstan.

The Voskhod project, which Dr Kurzin describes as “one of the best chrome projects on the planet”, is now being fast-tracked instead of Shevchenko.
The latter, a “robust” nickel project, would cost about US$594 million to build, a sum that Dr Kurzin is unwilling to finance at a time when Oriel’s share price is low. Instead, Oriel is looking for a partner to form a joint venture at Shevchenko.
Oriel’s gold exploration projects are to be spun off into a separate, listed company, Lero Gold, which has raised C$5 million and in which Oriel will be a 60% shareholder.
There is, says Dr Kurzin, a great deal of behind-the-scenes activity going on in Oriel that he can’t yet discuss. But he promises “shareholders will be pleased” when all is revealed.

Dr Kurzin’s latest venture, Everfor Diamonds, listed on AIM on April 6. He says that when he was working on Puma’s projects, it became clear Russia’s Kola Peninsula had never been properly explored for diamonds while having all the geological indications that they might be present there.
So, in 2000, he hired Don Duncan, who had spent 25 years with De Beers exploring for, and mining, diamonds on three continents, to look at the Kola area.

“De Beers, Rio Tinto and BHPB are showing big interest in Kola now. But they are having difficulties getting licenses so far. We raised money privately – £3 million – to buy a Russian company that already had four licenses and to complete two years of extensive aero-geophysics and sampling work that was analysed in South African laboratories,” says Dr Kurzin.
Everfor raised £1.63 million ahead of its listing and “that allows us two years of aggressive exploration. So far we have identified about 40 priority drilling targets.”

Dr Kurzin and his family own 10 million Oriel shares, when options are included, and 8 million Everfor shares. The value of these stakes at present comes nowhere near the market value of his 5 million shares in UrAsia Energy, one of the world’s four listed uranium producers, now trading at more than C$3/share on the TSX Venture Exchange.

UrAsia is the brainchild of Frank Guistra, chairman of Endeavour Financial and a long-standing contact of Dr Kurzin’s. So, when UrAsia’s financial adviser, Canaccord, asked Dr Kurzin to help out, he had no hesitation.

He says: “I helped with the negotiations [in Kazakhstan]. I helped different mentalities from different cultures to understand one another.” UrAsia’s annualised production from its 70% interest in the Akdala in-situ leach mine in Kazakhstan is an estimated 1.4 Mlb of uranium oxide. Dr Kurzin now favours Kazakhstan more than Russia for his projects.
He says: “It is very much easier to work in a smaller country where you can find the right people and get the right answers.

ENDS