EVRAZ Announces Acquisition of Stake in Timir Iron Ore Project
04/02/2013 - EVRAZ plc has signed an agreement to acquire a stake in OJSC “Timir” for a total consideration of RUB4,950 million (approximately US$160 million) to be paid in several installments.
EVRAZ plc has signed an agreement to acquire a stake in OJSC “Timir” for a total consideration of RUB4,950 million (approximately US$160 million) to be paid in several installments. At completion, EVRAZ will receive a 51% stake in Timir; OJSC “Alrosa” will own 49% minus one share and Vnesheconombank (VEB) will receive one share.
Timir is a joint venture between EVRAZ and Alrosa created for the development of iron ore deposits and is currently holding licenses for four iron ore deposits (Tayozhnoye, Desovskoye, Tarynnakhskoye and Gorkitskoye) in the southern part of Yakutia in Russia with total mineral resource base under the Russian geological classification of 3.5 billion tonnes (Russian geological categories of A+B+C1).
The first phase of the Timir project involves development of the Tayozhnoye deposit with total mineral resources under the Russian geological classification of 341 million tonnes of iron ore (Russian geological categories of A+B+C1) and grades of 38-40% Fe. The Tayozhnoye deposit is located 150 km north of Neryungri city, an important industrial center in the southern part of Yakutia, and close to the existing infrastructure – a railroad, power grid and a paved road. The mining capacity of the Tayozhnoye open pit is estimated at 15 million tonnes of iron ore per annum. Convenient geographical location of the Tayozhnoye deposit on a railway connected to the TransSiberian railroad provides for competitive delivery of iron ore products to EVRAZ ZSMK and Southeast Asian countries through the Far East of Russia.
Total investments in the first phase of the Timir project are estimated to amount to approximately US$1.8 billion during the period from 2013 to 2018. EVRAZ and Alrosa are expected to finance the Timir project on a pro rata basis. Upon completion of the feasibility study of the first phase, Timir may apply for funding on a project finance basis.
The implementation of the whole Timir project should eventually create 11,000 new jobs including 4,000 positions at the Tayozhnoye ore mining and processing plant.
Alexander Frolov, EVRAZ’s CEO, commented, “The large iron ore resources of Timir in combination with proximity to the existing infrastructure provide for the efficient development of the project as a low cost operation. The realization of the Timir project is an important milestone of the Company’s strategy for securing a raw materials base for EVRAZ ZSMK, and is envisaged to eventually replace the gradually depleting reserves of Evrazruda over the next 5-10 years.”
