July 31, 2008 – Evraz Group S.A.(LSE: EVR) (“Evraz”) today announced the signing of a Co-operation Agreement with China Metallurgical Group Corporation (“MCC”) for the joint development of the Cape Lambert Iron Ore Project (“the Project”) located in the Northern coastal Pilbara region of Western Australia.
The Project comprises a 1.56 billion tonne JORC compliant magnetite iron ore resource with a projected annual output of 15 million tonnes of magnetite concentrate and is at feasibility stage.
Evraz and MCC will jointly invest in the development of the Project with Evraz having a 75% and MCC a 25% economic interest in the Project. It is anticipated that all of the Project’s iron ore will be shipped to China to meet the requirements of Chinese mills, while MCC will be entitled to sign an off-take agreement for up to 60% of the iron ore volumes.
The new Joint Venture will benefit from a combination of the extensive magnetite mining and production expertise and financial resources of the two parent companies, Evraz and MCC. Evraz has considerable experience in processing magnetite ore to make significant volumes of pellets and fines. MCC will bring its expertise in EPC (provision of engineering design services, procurement and construction), based on its access to the best engineering processes, technologies and equipment in China and worldwide.
Evraz’s participation in the Joint Venture is subject to FIRB approval in Australia.
Merrill Lynch is acting as financial adviser and Blake Dawson is acting as legal adviser to Evraz.
Evraz is a large vertically integrated steel, mining and vanadium business with operations in the Russian Federation, Europe, USA, Canada and South Africa. Evraz produced 16.4 million tonnes of crude steel in 2007, ranking it among the 17 largest steel producers in the world by volume. Evraz's total consolidated revenues for the year ended 31 December 2007 were US$12,808 million and consolidated EBITDA was US$4,254 million. Evraz is listed on the London Stock Exchange.
Evraz’s mining operations, located in Russia, Ukraine and South Africa, cover more than 91% of iron ore and over 100% of coking coal internal consumption.
China Metallurgical Group Corporation Ltd. (MCC short in English) is a major enterprise group under supervision of the central government of PRC. MCC owns nearly 70 fully or partly controlled subsidiaries all around the world. The main businesses of MCC focus on engineering services, procurement and construction (EPC), resources exploitation, steelmaking, power generation, papermaking, equipment fabrication, etc. In 2007, MCC’s revenues reached US$17.5 billion, with a total asset value of US$22 billion.
About the Cape Lambert Iron Ore Project
Cape Lambert (ASX:CFE, AIM:CLIO) is an iron ore exploration and development company listed on ASX and AIM. Cape Lambert recently sold its main iron ore asset, the Cape Lambert Iron Ore Project to MCC for a total consideration of AUD$400 million.
The project has an area of 223 square km, located in the Northern coastal Pilbara region of Western Australia. The resource is a JORC Code compliant resource of 1.56 billion tonnes at 31.2% Fe.
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