TIDMEUA
RNS Number : 4449J
Eurasia Mining PLC
05 December 2018
Eurasia Mining plc (AIM: EUA)
("Eurasia" or the "Company")
Monchetundra Mine Permit - further steps following permit
award
Following the Company's announcement dated 20 November 2018 made
on the final award of a mining permit for the Monchetundra PGM and
base metals mine, Eurasia Mining plc (AIM: EUA), the PGM and gold
producing company, is pleased to offer further details of the now
fully approved mine permit and the administrative steps following
the final award which bring the matter to a successful
conclusion.
The mine permit was awarded by government decree made public on
20 November 2018 (see RNS dated 20 November 2018). The mining
permit is granted based on a previously issued discovery
certificate and fully authorises mine construction at the circa
2Moz Pd equivalent state-approved reserve and resource (1.9Moz
palladium dominant 2PGE as palladium, platinum and gold) with
significant additional nickel and copper revenue streams. The
Monchetundra Project is located adjacent to the town of
Monchegorsk, 130km south of Murmansk on the Kola Peninsula,
bordering Finland in Northwest Russia.
Highlights
-- Mine permit now fully approved and authorised by the office
of prime Minister Dmitry Medvedev.
-- The Company has conducted telephone communication with
RosNedra, the Russian Federal agency responsible for mining,
confirming that an order to issue the license documentation has
been forwarded by the Ministry of Natural Resources to RosNedra and
that an official document detailing the permit will be forthcoming,
in accordance with standard procedure.
-- The one-time license payment will also be confirmed to the
Company. Payment terms are set out on a 20/80 basis, ie 20%
initially and 80% within the first 5 years of mine production.
-- The Monchetundra Project, with an in-situ total reserve and
resource value of approximately US$2.1 billion (an internal
calculation based on London Metal Exchange November 2018 spot metal
prices, and prepared for guidance only) is now licensed to mine and
can continue to the construction phase.
-- As previously announced, an Engineering Procurement
Construction & Financing ("EPCF") contract is already in place
with the Chinese state-owned major infrastructure project group
Sinosteel, for 85% (or US$149.6M) of a total contract value of
US$176M.
-- A US$50M sub-contract is specified within the contract and is
assigned to Eurasia's 80% subsidiary Terskaya Gornaya Kompany
("TGK"), or a sub-contractor of its choosing, for engineering and
pit development works in advance of mining.
-- The mining license is the first hard rock PGM mining permit
to be issued in the Russian Federation since February 2016.
-- The 1.9M oz Pd eq (with a 3:1 Pd:Pt ratio in favour of
palladium based on production) reserve and resource with base
metals credits are now permitted for extraction at two open pit
locations, West Nittis and Loipishnune (for further details see
announcement dated 31 May 2017).
Christian Schaffalitzky, Managing Director and Executive
Chairman for Eurasia, commented: "We are thrilled and honoured to
have received the final permission required to proceed and build a
mine at our Monchetundra PGM and base metals project. This
permission and indeed recent milestones achieved by Eurasia with
the Monchetundra Project are the culmination of many years of hard
work and conviction to pursue a PGM project in an emerging PGM
district and we are extremely thankful to the cooperation we have
received at local and federal level in the jurisdiction we have
chosen to operate in.
This is the start of a new chapter for the Company and its
ambitions. Our commercial arrangements regarding the Monchetundra
Project development can now be realised at this large low cost PGM
and base metals project. The Company would like to thank the
officials in all of the relevant ministries who have accessed the
projects viability. The issue of this mining permit represents a
sea change for the company, as this is a major project which the
company intends to develop alongside our West Kytlim PGM and gold
mine, which achieved steady state industrial scale production
during 2018.
It is also significant that very few mine permits are issued for
PGM projects, reflecting the lack of investment in this sector,
something that we the Directors feel makes this project
particularly valuable. The vast majority of permits issued in
Russia are for gold projects, and it is also quite rare in the
current phase of the resources cycle to find an exploration company
taking a project all the way from green fields exploration through
mine permitting. Now we progress onto mine development and
production, at Eurasia's second mining license, based on its own
discoveries, issued in less than three years.
As regards funding requirements, our arrangements with Sinosteel
mean the Company can move forward with the project's development
without recourse to further dilution of its shareholder base.
Finally, we note the recent price gains in Palladium to an
all-time high in November 2018 ($1,219USD/oz at the time of writing
(LBMA Prices)) as being particularly beneficial to the project.
It is our intention to offer specific timelines and objectives
for the projects development through 2019 in due course."
Overview
The mine permit application for the Monchetundra Project has now
reached a successful conclusion and the mine permit has now been
granted to Eurasia's 80% owned subsidiary Terskaya Gornaya Kompany
('TGK'). The permit is granted based on a discovery certificate
which was awarded to TGK to acknowledge its own self-funded
exploration and development of two ore bodies within the
Monchetundra Project, namely West Nittis and Loipishnune.
Eurasia began working at the Monchetundra Project in 2006 and
developed the project from a green fields exploration project,
initially in a joint venture with Anglo American Platinum whose
interest Eurasia bought in 2014. Field work comprised extensive
trenching, geochemical sampling, geophysics programs and several
generations of core drilling for a total of 33km of drill core.
A decision was taken in 2016 to finalise the exploration phase
of the project and to apply for a discovery certificate based on
the current known resource. A feasibility study was also
commissioned to Russian subsoil licensing standards and was later
approved by Rosnedra.. Two open pittable resources, occurring about
2 kilometres apart, have been defined to a depth below surface of
circa 200m. Loipishnune, the larger of the two open pits and
carrying greater than 70% of the current resource inventory has a
strike length of ca 1km and is open to the southeast and at depth.
The open pits occur less than 10 km from the town of Monchegorsk, a
historic mining town with ideal infrastructure including a metal
refinery operated by Norilsk Nickel, which sits between the
Monchetundra Project and the town of Monchegorsk.
Currently, state approved reserves and resources within the
Monchetundra Project comprise Russian standard C1 and C2 categories
of 59 tonnes (1.9 million ounces) palladium equivalent (2PGE + Gold
with a Palladium to Platinum ratio of 3:1 based on production
ounces) at two open-pittable locations, West Nittis and
Loipishnune. These open pits also contain significant base metal
credits including 28,124 tonnes of copper, 30,410 tonnes of nickel.
The Directors believe the project to be unique globally in being
led by high palladium grades, and that it represents a significant
lower cost open pit mining operation which compares favourably to
the relatively expensive underground operations in South Africa,
the dominant player in the global PGM market.
Engineering Procurement Construction and Financing (EPCF)
Contract
As previously announced, an EPCF agreement is already in place
with Sinosteel, a Chinese state owned major infrastructure project
group. 85 per cent (or US$149,600,000) of the contract value has
been arranged as debt-based by Sinosteel - this element of plant
construction costs will remain on the Sinosteel balance sheet until
such time as the plant is operating at full capacity of 130,000oz
per year and to designed specification. A further US$50,000,000
sub-contract has been assigned by Sinosteel to Eurasia's subsidiary
Terskaya Gornaya Kompany (TGK) for the development of the two open
pits in preparation for mining and may be drawn down in advance of
the main mine construction.
Discussions continue with suitably qualified and experienced
companies regarding contracting part of the mining operation at
Monchetundra, as well as acting as owners' representative during
mine construction. The Company hopes to emulate the contract mining
arrangement utilised at West Kytlim, the Company's operating PGM
and gold mine, by contracting the mining operation, for a
percentage of gross revenue, to a reputable international
specialist company with experience in Russia, while maintaining
ultimate control and ownership of the project.
History of the Monchetundra Project permitting process
A feasibility study and reserves estimate for the contained
reserves and resources achieved state approvals in May 2017 (see
announcement dated 31 May 2017). Subsequently, a discovery
certificate, which guarantees mining rights to the holder, was
issued in July 2017 for the reserves and resources contained within
two open pittable locations, Loipishnune and West Nittis. A mining
license application proceeded directly on receipt of the discovery
certificate and later achieved provisional approval from Rosnedra,
the federal agency responsible for mining. The application was
later reviewed by the Federal Anti-Monopoly Service before being
approved by both the Federal Securities Service (FSB) and Ministry
of Defence (MOD). The permit application was then approved at the
Ministry for Economic Development and Ministry of Natural
Resources, the ministry which governs Rosnedra. On approval at the
Ministry for Natural Resources the application was forwarded to the
office of the Prime Minister for final approval. This approval was
made public on the 20 November 2018 at which point the permit
application process successfully concluded. Official documentation
necessarily follows the official granting of the license as per due
process.
Consent for release
Christian Schaffalitzky, FIMMM, PGeo, CEng, is a director of the
Company. He has reviewed the update and consents to the inclusion
of the exploration information in the form and context in which it
appears here. He is a Competent Person for the purposes of the
reporting of these results.
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
Enquiries:
Eurasia Mining PLC Tel: +44 (0)207 932 0418
Christian Schaffalitzky / Keith Byrne
WH Ireland Limited (Nominated Adviser Tel: +44 (0)161 832 2174
& Broker)
Katy Mitchell / James Sinclair-Ford
First Equity Limited (Joint Broker) Tel: +44 (0)20 7374 2212
Jason Robertson
Optiva Securities (Joint Broker)
Christian Dennis Tel: +44 (0) 20 3137 1902
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END
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