project for construction of ozernoemining and processing...
TRANSCRIPT
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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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.
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General information
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
Location of the Republic of Buryatia in Eurasia
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General information
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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 FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
# 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
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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
Performance indicators and development plan
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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)
Performance indicators and development plan
*Source: IFC Metropol
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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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
Performance indicators and development plan
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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
Performance indicators and development plan
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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Construction schedule of Ozerny mining and processing plant and of
infrastructural facilities
Performance indicators and development plan
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
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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
Performance indicators and development plan
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
Site layout
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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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8
5
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9
6
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Performance indicators and development plan
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
* 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.
Performance indicators and development plan
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
* In the technical project the General designer is reviewing other
process options
*
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Process flow sheetSchematic process flow diagram
Performance indicators and development plan
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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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Performance indicators and development plan
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
� Core storage facility � Road, Holoy river bridge
� Power line 10 kV� Geologists’ camp � Telecom, Internet
� Shift camp
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Built infrastructure
Performance indicators and development plan
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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.
Performance indicators and development plan
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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.
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
� 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
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
�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 and objectives for 2010
Key results achieved in 2009/2
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
� 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
Key results and objectives for 2010
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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Key results and objectives for 2010
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
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant
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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
www.mbc-corp.com
Roman ChernigovtsevPublic Relations Manager
PROJECT FOR CONSTRUCTION of Ozernoe Mining and Processing Plant