The deregulation of the gold market in the Commonwealth of Independent States (CIS) next year would assist in raising project finance for companies involved in mining ventures, the managing director of Celtic Resources, Mr Sean Finlay, said at an extraordinary general meeting in Dublin yesterday.

A resolution for the company to allot additional ordinary share capital without recourse to shareholders was passed at the meeting, amid news of a recovery in the price of gold and improvements in the regulatory regime.

Mr Finlay said that the price of gold had declined "quite precipitously" from $370 (ú270) per ounce in January, 1997, to as low as $278 per ounce early this year. But the price had recovered to about $300 per ounce.

Recent legislative changes at the passing of the 1998 Budget would allow commercial banks, both within and outside the CIS, to deal on the gold market from January 1st, 1999.

"This new arrangement creates a free gold market," he said after the meeting.

Celtic's joint venture project, which has a 10 million gold ounce reserve in the Republic of Sakha, has been listed by the Russian parliament, the Duma, as eligible for a production sharing agreement (PSA). This allows for accelerated repayments of capital investment by a foreign partner and a consolidated tax agreement.

"Instead of having to deal with up to a dozen taxation and regulatory authorities, all of the taxes are consolidated in one agreement," Mr Finlay said. He said that the legislation passed on March 12th would mean that commercial banks would no longer have to apply for a licence to buy gold "on a case by case basis" after the Central Bank of Russia gets first call to buy at London Metal Exchange prices. The directors were confident, he added, that the company's Nezhdaninskoye gold project was "sufficiently robust" to withstand a further descent in the current gold price.