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EastRussia Bulletin: Development of Udokan moves from Rosteha to Usmanov structures - EastRussia | Far East

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EastRussia Bulletin: Development of Udokan passes from Rostek to Usmanov's structures

EastRussia Bulletin: Development of Udokan passes from Rostek to Usmanov's structures
Photo: EastRussia
Alisher Usmanov's structures are returning to the development project of the Udokan deposit in the Trans-Baikal Territory (Kalarsky district), with Rostek coming out of the project, according to the next published issue of the EastRussia bulletin.

The management of Baikal Mining Company (BGK, part of USM Holdings A. Usmanov) intends to provide project financing for the development of the field at the expense of bank funds. It is assumed that 30-40% of the required amount will be provided at the expense of own funds, and the remaining 60-70% - at the expense of banks. In particular, the model of cooperation is discussed with Gazprombank.

Start construction of the GOK with the processing capacity of 12 million tons of ore and the release of 120 thousand tons of copper in concentrate per year at the field is planned in 2019, to start production in 2021. In "Rosteha" they expect to make a decision by the end of this year to implement the agreement on the 25% option in the project (the option is valid until the end of 2019). According to market experts, the value of Rostekh's option in the project can be based on the amount of the project costs incurred or other valuation of the asset. The state corporation can use the scheme of partial exchange of an asset for shares, which was previously used in a joint project with PJSC Polyus. In 2017, Rostek agreed to sell its stake in 49% in the Sukhoi Log Gold Deposit (licensed by Polyus and Rostekh) in the Irkutsk Region to Polyus for $ 139 million in cash and $ 146 million shares company.

Also, the Baikal Mining Company stopped negotiations with JSC Russian Copper Company (RMK) I. Altushkin on the latter's participation in the development of the field. In 2017, it was planned that RMK will receive 50% in the project. The balance reserves of Udokan, which is the largest copper deposit in Russia, are 20,1 million tons of copper and 17,119 thousand tons of silver. The resource potential of the field is estimated at more than 27 million tons of copper. The plan for the development of Udokan involves the creation of an industrial complex focused on the production of cathode copper and associated silver.

A detailed analysis of this and other relevant topics can be found in the weekly bulletin EastRussia (https://www.eastrussia.ru/subscribe/).