KAZ Minerals Acquires Copper Project in Russia’s Far East

Over time, copper production from Baimskaya could offset declining production from other KAZ operations.
KAZ Minerals has agreed to acquire the Baimskaya copper project in the Chukotka region of Russia’s Far East for $900 million in cash and shares, comprising initial consideration of $675 million and deferred consideration of $225 million. Baimskaya is a significant undeveloped asset, with potential to become a largescale, low-cost, open-pit copper mine. Average annual production over the first 10 years of operation is forecast at 250,000 metric tons (mt) of copper and 400,000 ounces (oz) of gold. Mine life is forecast at approximately 25 years.

The Baimskaya project has current JORC-compliant resources of 9.5 million mt of copper at an average grade of 0.43% copper and 16.5 million oz of gold at an average grade of 0.23 g/mt gold. The project has a license area of 1,300 km2 that offers potential for resource expansion.

Capital expenditures to develop Baimskaya are estimated at $5.5 billion, subject to a feasibility study that is scheduled for completion by the end of 2019. Detailed engineering, procurement, and construction are currently planned to take place from 2020 through 2026, followed by ramp up to full production by the end of 2027.

Baimskaya is located in a region identified by the Russian government as strategically important for economic development and is expected to benefit from state infrastructure development and tax incentives. A prefeasibility study of the project assumed 60 million mt/y of ore processing capacity through two concentrators.

KAZ Minerals Chair Oleg Novachuk commented, “The acquisition of Baimskaya marks the next stage of the transformation of KAZ Minerals. The development of this new project in Russia will enable the Group to continue its industry leading growth, delivering both value and volume as the copper market is forecast to enter a period of significant supply deficit. Through our successful execution of the Bozshakol and Aktogay projects in Kazakhstan, we have built a track record for project execution that makes KAZ Minerals the ideal platform to develop this globally significant asset.”

As featured in Womp 2018 Vol 09 - www.womp-int.com