Evraz Expands Interests in Coal Mining Assets
May 18, 2006 — Evraz Group S.A. (Evraz, LSE: EVR) announces that OJSC Raspadskaya, which is owned by Evraz’s joint venture Corber Enterprises Limited, has agreed to acquire two additional coal mining assets, Mezhdurechenskaya Coal Company-96 and Razrez Raspadskiy. Evraz’s partner in Corber Enterprises is to contribute these assets to Raspadskaya, and Evraz is to provide approximately US$225 million in cash in order to maintain its current 50% interest in Corber Enterprises, and also US$300 million in short-term financial guarantees for OJSC Raspadskaya. The transactions are to occur following approval by Raspadskaya’s shareholders" meeting, which is currently scheduled for June 8, 2006.
Mezhdurechenskaya Coal Company-96 and Razrez Raspadskiy are rapidly growing coal mining companies in the Kuzbass region. Explored resources under Russian classifications are estimated at approximately 293 million tonnes of coking coal, and total sales in 2005 were approximately 3.3 million tonnes. The companies plan to increase their production up to 6 million tonnes p.a. by 2010. These operations mine semi-hard coking coal. The primary customers for these operations are Evraz and other steel companies, as well as independent coke producers.
Valery Khoroshkovsky, Evraz’s CEO, commented on this investment:
“This new investment into Raspadskaya is part of our strategy of expanding our coal mining asset base through high-quality profitable acquisitions. Mezhdurechenskaya Coal Company-96 and Razrez Raspadskiy definitely fall into this strategic line. Addition of these assets into Raspadskaya will grow this company to one of Russia’s largest coking coal producers. We are confident of Raspadskaya’s management who has a strong track record of building and developing successful coal mining operations and who will build further value and generate additional returns for shareholders of the Company.”
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