PROJECT FOR CONSTRUCTION of OzernoeMining and Processing …mvs.metropol.ru/mediacache/561b3c9e-263a-4031-a7a6... · 2010-04-09 · March2010 PROJECT FOR CONSTRUCTION of OzernoeMining

March 2010

PROJECT FOR CONSTRUCTION

of Ozernoe Mining and Processing Plant for the Production

of Zinc, Lead and Gold concentrates

Republic of Buryatia, the Russian Federation

(Summary of Bankable Feasibility Study)

1. General information

2. Performance indicators and development plan

3. Project financial data, investment attraction

4. Key results and objectives for 2010

5. Project team

2PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant

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10

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26

30

Assets of «METROPOL» Group managed by MBC Corporation

Transport infrastructure of Buryatia

General information

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1. Ozernoelead-zinc deposit

157 mln tons of ore (JORC)

(Zn – 8,16 mln tons, Pb – 1,6 mln tons, Ag –

4,5 thou. tons)

2. Kholodninskoelead-zinc deposit

178 mln tons of ore (JORC)

(Zn – 10 mln tons, Pb – 1,42 mln tons)

4. Ermakovskoeberyllium deposit

1,4 mln tons of ore

(Be content – 1,0%)

3. Nazarovskoegold-sulfide-zinc deposit

6 mln tons of ore

(Zn – 0,4 mln tons, Au – 10 tons)

5. Talinskoebrown coal deposit

13 mln tons of coal

PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant

Project status

� The license for Ozernoe deposit (zinc, lead, gold) is owned by Techprominvest LLC (a part of

Metropol Group of Companies). The project is managed by MBC Corporation (a part of Metropol

Group of Companies). The deposit is located in Buryatia, 140 km north from Transsib railway.

The JORC Indicated Resource totals 157 Mt of ore grading 5,2% zinc and 1% lead. For its

reserves, the deposit is ranked number 9.

� The construction of Ozernoe mining and processing plant is being planned to mine a

minimum of 6,0 mtpa of ore and to produce 740 thousand tons of Zn concentrate, 110

thousand tons of Pb concentrate and 2,5 tons of ‘Dore’ alloy per year. By production volume

Ozernoe deposit could move up to the 6th or 7th place in the rank of the world producers.

Commissioning is scheduled for year 2012, reaching production capacity – 2013.

4

General information


Project status

� A Technical Project for deposit stripping has been approved. Stripping and blasting work

commenced. Mine construction is ongoing, with commissioning scheduled for 2010. Tenders for

the delivery of a mining equipment, complete process plant equipment and power plant have

been prepared.

� A Bankable Feasibility Study has been developed. An approval is received from the Ministry

of Industry of the Russian Federation. The discussions with the largest banks of Russia, China,

Japan and USA on the project financing are in progress.

� The first infrastructural facilities have been built and commissioned: a shift camp, a core

storage facility, local roads, cellular telecom system, Wi-Fi Internet, power lines.

These secure advancement of the construction of the mining and processing plant.

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General information


Location of the Republic of Buryatia in Eurasia

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General information


Ozernoe deposit

General

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Ozernoe Ore Deposit is One of the World’s Largest Deposits

Location - 140 km north from Mogzon rail station of Transsib, 30 km from federal

road Ulan-Ude - Chita, 60 km from regional center - Sosnovo-Ozerskoye

settlement.

Reserves and resources, accounted by the

State balance of Natural resources of RFResources as per JORC

В+С1 – 104,96 Mt of ore

Lead – 1,31 Mt (1,25 %)

Zinc – 6,90 Mt (6,57 %)

Silver – 3 942 t (37,6 g/t)

С2 – 23,2 Mt of ore

Lead – 0,2 Mt (0,89 %)

Zink – 1,14 Mt (4,89 %)

Silver – 571 t (25,5 г/т)

Resource potential

Gold – 25 t

Indicated Resource

157 Mt of ore*

Zinc – 5,2 %

Lead – 1%

* Resource classification by AMC Consultants (UK),

2006

Mining License

Valid till: June 15, 2024

General information


# Project Country Owner

1 Mount Isa Australia Xstrata

2 Mehdiabad IranMehdiabad Zinc

Company

3 Red Dog USD Teck Cominko

4 McArthur River Canada Xstrata

5 Lanping China BHP Billiton

6Rampura-

AguchaIndia Hindustan Zinc

7 Kholodninskoe Russia MBC Corporation

8 Shalkya Казахстан Shalkya

9 Ozernoe Russia MBC Corporation

10 Century Australia OZ minerals

11 Antamina PeruXstrata/BHP/ Teck

Cominko

12 Vazante Brazil CMM

13 Angouran Iran Anzex Resources

Development stage

Prepared for development

No development

Red Dog

Lanping

Shalkya

Rampura-AguchaCentury

Mount Isa

McArthur River

Vazante

Angouran

Antamina

Ozernoe

Kholodninskoe

Mehdiabad

0

5

10

15

20

25

30

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32

Zn

, %

Mt

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Grade and volume comparison with other similar foreign projects

As per grade and volume, Ozernoe is comparable to the world‘s

largest zinc deposits

General information


0

2

4

6

8

10

12

14

16

2006 2008 2010 2012M

t

Potential zinc consumers

50% 30%

20%

* Roland Berger data

Main potential consumer of Ozernoe Zn concentrate:

� China

� Kazakhstan

� Russia

Zn

Pb

0

500

1000

1500

2000

2500

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

AMC (апрель 2006) Lundin (апрель 2008)

СОГРА (декабрь 2008) BNP (октябрь 2008)

Средняя (без учета данных Проекта) В целях Проекта

Zinc price forecast, $/t

Zinc and Lead world market growth trend *

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General information


Performance indicators and development plan

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Strategic objective – construction of “Ozerny GOK” mining and processing plant on

the basis of polymetallic ore reserves of Ozernoe and Nazarovskoe deposits

Designed output capacity of Ozerny GOK

� Mining method – open pit

� Operations startup – 2012

� Mining rate – over 6,0 mtpa of ore

� Annual average concentrate production

� Zinc concentrate - 740 thousand tons

� Lead concentrate - 110 thousand tons

� Annual average metal production in Dore alloy

� Silver - 100 tons

� Gold - 1,24 tons*

* including Reserve of С2 category and Resource of Р1 category

� GOK Life time – 25 years


Zinc producers (zinc in concentrate)

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Planned production volumes of MBC Corporation will bring the company into

line of the world’s largest Zn producers

Source: Company data, broker reports. December 2009



Forecasted sales breakdown

Pricing scenariosProceeds, mln

$/year **

Conservative forecast*

Zn – 1350 $/т

Pb – 1300 $/т

Ag – 10 $/oz

Au – 850 $/oz

572

Actual, second half 2009

Zn – 2000 $/т

Pb – 2000 $/т

Ag – 14,5 $/oz

Au – 975 $/oz

901

Probable forecast*

Zn – 2500 $/т

Pb – 2500 $/т

Ag –17,3 $/oz

Au – 1127 $/oz

1 149

30%

50%20%

China Russia Kazakhstan

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* Zinc price is calculated as exchange metal price

(Zn,Pb) exclusive of ‘treatment charge’

** Nominal values have been used (considering

macroeconomic indices growth rate)


*Source: IFC Metropol


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Main construction projects

Facility Features

Open cast mine 650 million tons of rocks to be removed

Processing plant Production rate – no less than 6 mtpa of ore

Tailings and pyrite storage Total volume – 111 million tons

Site infrastructure Site area – 35 km2

Power line (linking to “Buryatenergo” local grid) 30 km, 110 kV, 20 MW

Power plant 60 MW

Automotive and rail roads 165 km



Long-term work plan

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Key Stages Start Time of Activity

Stripping Q3, 2009

Mine commissioning Q3, 2010

Commencement of processing plant construction Q1, 2011

Commissioning of mining and processing plant

Q1, 2012

Production ramp-up to designed mining rate Q3, 2013



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Construction schedule of Ozerny mining and processing plant and of

infrastructural facilities


Facility2010 2011 2012 2013

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1. Mining (open pit)

I stage

II stage

2. “Turnkey” delivery of process plant equipment

I stage

II stage

Ramp-up to the designed capacity of no less than 6 mtpa

3. Power line 110 kV (Buryatenergo), 20 MW

4. Thermal power station, 60 MW

I stage, 30 MW

II stage, 30 MW

5. Road renovation

6. Rail road

7. Tailing storage facility, pyrite storage

8. Warehousing

9. 800 men settlement


Design and TEO activities

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Project Item Design Office Date

Technical Project of Ozernoe Mining and Processing Plant construction (in Russian

format)

Sibtsvetmetniiproekt - General Designer

Krasnoyarsk, Russia2010

Technical Project “Stripping and pilot mining of Ozernoe deposit”PiterGorProject

St.Petersburg, Russia2009

Sections of International BFSHatch

Perth, Australia2008

Business plan for Construction of Ozernoe power plantSibVNIPIenergoprom

Irkutsk, Russia2007

TEO (project) of construction of rail road Mogzon-OzernoeVostsibtransproekt

Irkutsk, Russia2007

Strategic options and business plan of MBC CorporationRoland Berger

Moscow office, Russia2007

Pre-Feasibility StudyAMC Consultants

Maidenhead, UK2006



Site layout

1

4

3

31. Open pit

2. Process plant

3. Tailing storage facility

4. Pyrite storage facility

5. Power plant 60 MW

6. Shift camp

7. Road and rail to Mogzon station

8. Power line 110 kV

9. Water pipe-line

Khorga Lake

Isinga Lake

Gunda Lake

• In the technical project the site layout is being

defined by the General designer

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2

8

5

7

9

6

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* In the technical project the General designer is working on pit optimization

*

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Mining – open pit

� Open pit parameters at the

end of development:

In plan: 2675 х 900 m

Depth: 340 m

� Life of mine – 18 years;

� A mining transportation

system using dump trucks and

putting wastes into outside dump

is adopted;

� Preparation for rocks

excavation is to be carried out

with drilling and blasting;

� Total volume of material to

be moved – 650 million tons.



* In the technical project the General designer is reviewing other

process options

*

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Process flow sheetSchematic process flow diagram



Process flow sheet for gold and zinc ore from Nazarovskoe

deposit*

* In the feasibility study of ore quality other processes are being considered

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� Core storage facility � Road, Holoy river bridge

� Power line 10 kV� Geologists’ camp � Telecom, Internet

� Shift camp

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Built infrastructure



Rock blasting, October 2009

Rocks excavation after blasting, November 2009

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Completed work on mine construction

� Forest removal is completed on an area of 85 ha;

� Top soil removal and stripping was completed at

the open-pit area cleared from the forest. 127 000

м3 of top soil have been removed to stockpile and

273 000 м3 of overburden – to waste dumps;

� In October 2009 60 000 м3 of rocks have been

blasted. 854 holes (4300 meters) drilled, 35 tons of

explosives used;

� Waste dumps and top soil stockpile have been set

up;

� On-site roads – 10 km have been built.



Project financial indicators, investment attraction

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Preparation for project financing – TEO Investment

Content of TEO Investment

� General information, source of information, project summary, project

description, basic design principals;

� Information about major project participants;

� Proposed strategy for developing the deposit and a plan of

administrative and technical measures to be completed during the

project;

� Project engineering support;

� Commodity description, market review. Sales Plan, marketing strategy;

� Cost-effectiveness analysis, capital investments, depreciation,

Environmental;

� Tax proceeds;

� Cost effectiveness indicators.

•TEO Investment has passed a preliminary examination of one of the leading Russian banks, obtained a positive appraisal from Ministry of Industry and Trade of the

Russian Federation, a detailed due diligence is in process.


� Commencement of the deposit development and construction of mining and processing

enterprise. A foundation has been set up for fulfillment of the license requirements,

commissioning of mine construction with a capacity of 1 mtpa of ore, in particular.

�We have set up the work for designing of mining and processing enterprise and off site

infrastructure, prepared international tender procedure for complete delivery of mining

equipment, processing plant and thermal power station. This will provide foundation for

fulfillment of the license requirements in future and enable us to optimize expenses for the

construction of mining and processing plant (GOK) with a capacity of no less than 6 mtpa of ore.

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Key results and objectives for 2010

Key results achieved in 2009/1


�We have started the work for arranging of external financing: a “TEO Investment for

Construction of Ozernoe Mining and Processing Plant” was prepared and approved; the

negotiations with Russian and foreign financial and industrial companies and individuals are

being conducted and will be continued. The basis was created for the involvement of outside

funds for the enterprise to reach the designed capacity.

�We have carried out re-organization and optimization of the company management including

manpower and other operating costs. This allowed us to increase efficiency in the Corporation

activity, to move on to direct management of operating company – Ozernoe Mining and

Processing Plant (Ozerny GOK) to provide further resource accumulation and employ highly

qualified personnel.

�We have settled relations with Lundin Mining (their share was repurchased) and Hatch (the

contract for BFS development is closed). This allowed us to independently conduct negotiations

on the involvement of outside funds and holding international tender procedures.

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Key results achieved in 2009/2


� Prepare and issue for appraisal a technical project of Ozernoe Mining and Processing plant

with a capacity of no less than 6,0 mtpa of ore with a General designer JSC

Sibtsvetmetniiproekt; complete site investigation work for the construction of the process

plant, tailings and pyrite storage facilities, power plant, automotive and rail roads;

� Complete site investigation work for the construction of the process plant, tailings and pyrite

storage facilities, power plant, automotive and rail roads.

� Comply with a principal condition of the license agreement for 2010 – commission mining

enterprise with a capacity of 1 mtpa of ore in Q2.

� Attain an objective of arranging external financing for Ozernoe mining and processing plant

in the required amount, by means of sale of shares, debt or project finance, and crediting of

equipment deliveries.

� Carry out tenders and prepare proposals for delivery and construction of the main facilities of

Ozernoe mining and processing plant; firstly – for the process plant, power plant, mining

equipment.

� Carry out optimization of ownership structure and investment project management

structure.

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Primary objectives for 2010



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Planned tenders for 2010

Facility Requirement Tender dates Major participants

Mining Equipment

Complete delivery of mining equipment:

drilling rigs, excavators, bulldozers, loaders,

dump trucks

Pre-qualification :

I Quarter 2010

Selection of a winner:

II Quarter 2010

Sign Delivery Contract :

III Quarter 2010

Sumitomo Corporation,

Liebherr, Bucyrus International,

Inc., Caterpillar, Sinomash,

Sandvik Mining and

Construction CIS , Mining

Solutions , China National

Construction Machinery

Corporation

Processing Plant

“Turnkey” delivery of process plant with a

capacity of a minimum 6 mtpa to produce

concentrate of Zn 50% minimum

Tecnicas Reunidas, SNC Lavalin

Inc, Wardrop, Aker Solutions,

Bateman Engineering, Russia

B.V., Outotec Minerals ,

Tyazhmash

Power Plant“Turnkey” delivery of equipment for 60MW

power plant fired by local brown coal

Group E4, Alstom, Tyazhmash,

ZUMK-Engineering, Siemens

Construction

General contract for infrastructure

construction: buildings and constructions on

site, residential settlement, roads, etc.

Group E4, Garant Plus, MCC

Overseas

Logistics, Equipment Delivery

Working out logistics schemes, customs

processing, organization of equipment

delivery to the site

Geodis Rus , Eurosib-Logistics,

Bertling Logistics


MBC Corporation project management team

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Michael SoltonAn Independent director of MBC

Resources Company.

He has got his education in Moscow State

Institute of International Relations and

Georgetown University Law Center.

Founder of the law firm of Solton, Rosen

and Balakhovsky, LLP (NY, USA).

Mikhail SlipenchukChairman of Board of Directors of MBC

Corporation, General Director of IFC

“METROPOL”. Graduated from Moscow

State University n.a. M.V. Lomonosov.

Founder of METROPOL Group of

Companies.

Ilya OkhtyrskiyGeneral Director of MBC Corporation,

Deputy General Director of IFC

“METROPOL”.

Graduated from Moscow State

University n. a. M.V. Lomonosov.

Sergey GarichevDeputy General Director of MBC

Corporation. Graduated from

Moscow Physics & Technology

Institute (MPhTI). FEEDP, design,

development of Feasibility Studies

and BFS , production set-up,

operative planning.

Bair TsyrenovDeputy General Director , Head of MBC

Corporation representative office in the

Republic of Buryatia;

Graduated from Urals State University

n.a. Gorgkiy.

Relationships with Federal and republican

authorities.

Alexander GerasimovTechnical Director. Graduated from

Moscow State University n.a. M.V.

Lomonosov. Technical supervision of

site works. Participation in industrial

engineering and design.

Project team


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Ilgizar FakhrutdinovExecutive Director of Ozerny Mining

and Processing Plant. Graduated

from Krasnoyarsk Institute of

Nonferrous Metals n.a. M.I.Kalinin.

Management of activities on site.

Alexander PerfilievDeputy Technical Director of MBC

Resources. BFS development and

contracts with overseas companies.

Peter TsisinFinancial Director. Graduated from

the Ufa city State Aviation Technical

University.

Managerial supervision of financial

department, bank financing.

Project team

MBC Corporation

Russia, Moscow 119049,

13th Donskaya Street

Tel/Fax: +7 (495) 221 71 21

[email protected]

www.mbc-corp.com

Roman ChernigovtsevPublic Relations Manager

[email protected]


Documents

PROJECT FOR CONSTRUCTION of OzernoeMining and Processing …mvs.metropol.ru/mediacache/561b3c9e-263a-4031-a7a6... · 2010-04-09 · March2010 PROJECT FOR CONSTRUCTION of OzernoeMining