Evraz wins licence to develop Mezhegey coal deposit
July 24, 2008 – Evraz Group S.A. (LSE: EVR) (“Evraz” or the “Company”) today announced that it won the tender to develop the Mezhegey coal deposit in the Republic of Tyva, Russia. Evraz offered US$725 million in the tender held by the Russian State Mineral Resources Agency.
The Mezhegey coal deposit is located 800 km east of the city of Novokuznetsk, in the central part of the Republic of Tyva, East Siberia. It is a world class coking coal deposit with estimated category A+B+C1 coal reserves and resources of 213.5 million tonnes of hard coking coal (grade Zh under Russian classification).
The development of the Mezhegey deposit is expected to commence in 2010 with the first coal to be mined in 2014. Evraz plans that the target production level of 10 million tonnes of raw coal, i.e. approximately 8.4 million tonnes of coal concentrate, will be reached by 2016. Based on Evraz’s experience in developing coal projects in Siberia, the Company estimates the project’s development cost at approximately US$1.5 billion.
Commenting, Alexander Frolov, Evraz’s Chairman and CEO, said:
“The purchase of the licence to develop the Mezhegey coal deposit is in line with our strategy to expand Evraz’s mining platform. The Company will secure additional supply of high quality coking coal to its existing steel making facilities as well as deliver extra volumes of the coal to meet the growing demand from the market”.
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