TIDMKAZ
RNS Number : 0411P
KAZ Minerals PLC
05 June 2020
5 June 2020
BAIMSKAYA PROJECT UPDATE
KAZ Minerals today announces updated parameters for the
Baimskaya Project, based on feasibility study work completed to
date.
Work at the Baimskaya site in the second quarter has been
limited due to measures taken to control the spread of the Covid-19
virus in the region. Prior to the disruption, equipment and
materials were delivered to the site for the pioneer works
scheduled to take place during the year. Activity is expected to
resume in due course and the Group's capital expenditure guidance
of $150 million for 2020 remains in place.
Progress on the Bankable Feasibility Study has also been
impacted by Covid-19 related issues with teams in Moscow and
Vancouver required to work from home and restrictions on both
domestic and international travel.
The Group and the Russian government are continuing to work
together on the details of the power and transport infrastructure
required for the operational phase of the project including
potential take or pay agreements. Due to the additional time
required to finalise the infrastructure plan for the Project,
including Covid-19 related delays, the BFS is now expected to be
completed by the end of 2020.
Based on the results of ongoing drilling campaigns and work
completed on the BFS to date, some of the key parameters of the
Baimskaya Project have changed since those announced at the time of
acquisition:
(i) drilling results indicate a potential increase in Mineral
Resources which would lead to an extension of the mine life,
previously guided at around 25 years;
(ii) reflecting the expectation of increased Mineral Resources
and the latest available technology from equipment suppliers,
project economics are optimised by increasing design capacity for
the concentrator from 60 Mtpa to 70 Mtpa of ore processed;
(iii) the current construction plan for the processing plant
will ramp up the two lines in consecutive phases around 12 to 18
months apart, reducing the peak funding requirement when compared
to a simultaneous startup; and
(iv) the estimated capital budget for the Baimskaya project has
increased to around $7 billion(1) following more detailed costings
during the BFS work and due to the additional plant and equipment
required to deliver increased ore volumes for the new concentrator
design, including a larger mining fleet, maintenance facilities and
site accommodation. Around 10% of the capital budget is expected to
be incurred after production commences from the first line.
The timetable for construction remains around seven years.
Further details on the project timetable, capital expenditure,
production guidance and operating costs will be published upon
completion of the BFS. Discussions will then be further progressed
with potential lenders and the Group will also assess opportunities
for partnering on the Project.
Oleg Novachuk, Chair, said "We are working to develop our
execution strategy for the delivery of the Baimskaya copper
project, one of the world's largest undeveloped copper assets.
Study work and drilling completed so far at Baimskaya indicates
that a larger project will unlock the potential of the world class
Peschanka deposit. We look forward to updating the market with the
details of the Bankable Feasibility Study when it is completed
later this year."
[1] Capital budget is estimated in nominal terms based on 100%
share of development capital expenditure, subject to confirmation
in further study work.
For further information please contact:
KAZ Minerals PLC
====================== =========================== ======================
Chris Bucknall Investor Relations, London Tel: +44 20 7901 7882
Anna Mallere Investor Relations, London Tel: +44 20 7901 7814
Maksut Zhapabayev Corporate Communications, Tel: + 7 727 244 03
Almaty 53
====================== =========================== ======================
Brunswick Group
====================== =========================== ======================
Carole Cable, Charlie
Pretzlik Tel: +44 20 7404 5959
====================== =========================== ======================
REGISTERED OFFICE
6th Floor, Cardinal Place, 100 Victoria Street, London SW1E 5JL,
United Kingdom.
NOTES TO EDITORS
KAZ Minerals is a high growth copper company focused on large
scale, low cost, open pit mining in Kazakhstan, Russia and
Kyrgyzstan. It operates the Aktogay and Bozshakol open pit copper
mines in the East Region and Pavlodar region of Kazakhstan, three
underground mines and associated concentrators in the East Region
of Kazakhstan and the Bozymchak copper-gold mine in Kyrgyzstan. In
2019, total copper production was 311 kt with by-products of 201
koz of gold, 3,382 koz of silver and 38 kt of zinc in concentrate.
The Group acquired the Baimskaya project in the Chukotka region of
Russia in January 2019, one of the world's most significant
undeveloped copper assets, with the potential to become a large
scale, low cost, open pit copper mine.
The Group's new operations at Aktogay and Bozshakol have
delivered industry leading production growth and transformed KAZ
Minerals into a company dominated by world class, open pit copper
mines.
Aktogay is a large scale, open pit mine similar to Bozshakol,
with a remaining mine life of around 25 years (including the
expansion project) at an average copper grade of 0.35% (oxide) and
0.33% (sulphide). Aktogay commenced production of copper cathode
from oxide ore in December 2015 and copper in concentrate from
sulphide ore in February 2017. The operating sulphide concentrator
has an annual ore processing capacity of 25 million tonnes and the
sulphide processing capacity will be doubled to 50 million tonnes
with the addition of a second concentrator by the end of 2021.
Aktogay is competitively positioned on the global cost curve and
will produce an average of 100 kt of copper per year from sulphide
ore until 2021, increasing to 170 kt per year from 2022 to 2027,
after the second concentrator commences operations. Copper
production from oxide ore will be in the region of 20 kt per annum
until 2024.
Bozshakol is a first quartile asset on the global cost curve
with an annual ore processing capacity of 30 million tonnes and a
remaining mine life of c.40 years at an average copper grade of
0.36%. The mine and processing facilities commenced output in 2016
and will produce an average of 100 kt of copper cathode equivalent
and 120 koz of gold in concentrate per year over the first 10 years
of operations.
The Peschanka deposit within the Baimskaya licence area in
Russia has JORC resources of 9.5 Mt of copper at an average grade
of 0.43% and 16.5 Moz of gold at an average grade of 0.23 g/t. The
project is located in a region identified by the Russian Government
as strategically important for economic development and will
benefit from the construction of state-funded power and transport
infrastructure and the provision of tax incentives. The estimated
capital budget for construction is around $7 billion, with c.10% to
be incurred after the commencement of production. The detailed
parameters of the project are to be confirmed on completion of the
feasibility study by the end of 2020. The Group expects the project
to generate a significant NPV uplift and an attractive IRR at
analyst consensus copper prices. The development of Baimskaya will
enable the Group to continue its high growth trajectory, adding a
large scale, long life asset to the Group's portfolio.
KAZ Minerals is listed on the London Stock Exchange and the
Kazakhstan Stock Exchange and employs around 16,000 people,
principally in Kazakhstan.
This announcement contains inside information.
Definitions
Baimskaya or the Baimskaya the Baimskaya copper project in the Chukotka
Project region of Russia
BFS or Bankable Feasibility a feasibility study of the Baimskaya copper
Study project required for the financing of construction.
Covid-19 disease caused by Severe Acute Respiratory
Syndrome Coronavirus-2
Inferred Mineral Resources Inferred Mineral Resources estimated in accordance
with the JORC code
JORC Joint Ore Reserves Committee
KAZ Minerals or the Group KAZ Minerals PLC, together with its subsidiary
undertakings
Measured and Indicated Measured and Indicated Mineral Resources estimated
Mineral Resources in accordance with the JORC code
Mineral Resources Mineral Resources as defined under the JORC
code
Glossary
kt thousand metric tonnes
ktpa thousand metric tonnes per annum
koz thousand troy ounces
Mt million metric tonnes
Mtpa million metric tonnes per annum
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END
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