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News
June 29, 2006
METROPOL Group of Companies signed a preliminary agreement with the Swedish Lundin Mining Corporation for creation of a joint venture, in which 51 % of shares will belong to METROPOL Group of Companies, and 49 %, Lundin Mining. The enterprise is being established for development of the Ozerny lead and zinc deposit in the Republic of Buryatia. Lundin Mining estimated its stake at $125 million. According to preliminary arrangements, the transaction is to be concluded in August 2006.
The Ozernoye is located at 300 km to the northeast off Ulan Ude,
the capital of the Republic of Buryatia. This deposit is well known
and has been extensively explored in the 1970’s / 1980’s but no
production was carried out. In addition to lead and zinc, the
deposit contains much silver. The mineral reserves are estimated at
157 million tons. Currently the rights to develop the deposit fully
belong to METROPOL Group of Companies. East Siberian Metals
Corporation established in 2005 manages the
project.
Mr. Oleg Mikhailenko, Director General of East Siberian Metals
Corporation, said: ‘Achievement of profitable output using the
cutting edge equipment in the Ozernoye field would become one of
the biggest projects created from the ‘scratch’ in post-Soviet
Russia. We also review other ambitious projects in the Republic of
Buryatia. They would be of extreme significance for economic
development and growth in prosperity of this region. The
combination of our knowledge and Lundin Mining’s experience in
exploration and production creates a solid underpinning for
successful operation of the mining company.”
Karl-Axel Waplan, President and General Manager of Lundin Mining,
noted: ‘Implementation of the Ozernoye project can double our zinc
output, so we are inspired by this project’s potential and entry
into the enormous Russian market. The deposit has large ore
deposits, that’s why we are sure that, together with METROPOL
Group of Companies, we will be able to pursue highly profitable
production there.’
Preliminary estimate of the Ozernoye project was conducted by AMC
Consultants Propriety Ltd. (hereinafter, AMC), specifically for
METROPOL Group of Companies, in spring 2006. The study includes
assessment, preliminary analysis of the project and the cost of the
open mine development, and also the necessary infrastructure, which
meet the Russian standards and the project owners’ requirements.
Preliminary estimate envisages ore production by open-cut mining. A
processing plant for ore concentrate production will be built near
the field.
According to the agreement, Lundin Mining will become the project’s
technical manager. This concerns ore production, including project
development, and the facility construction. In addition, the
Swedish company will manage the field development and will be
responsible for the project financing arrangement. The preliminary
amount of investments came to $ 400 million. METROPOL Group of
Companies will carry out certain work before entering into the
transaction, including road construction planning and a rotational
village construction.
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