2nd Aug 2018 09:59
LONDON (Alliance News) - KAZ Minerals PLC said Thursday it will acquire a copper project in Russia in a cash and stock deal worth USD900 million.
The miner is buying the Baimskaya copper project in the Chukotka region of Russia from a group of individuals, including Chelsea Football Club owner Roman Abramovich and Alexander Abramov, one of the two heads of Russia's largest steel producer Evraz PLC.
The legal owner of the Baimskaya licence is LLC GDK Baimskaya, a unit of Aristus Holdings Ltd, which is controlled by a group of individual investors including Abramovich and Abramov.
The deal consideration includes an initial consideration of USD675 million and deferred payment of USD225 million.
The initial consideration will be for a 75% interest in the Baimskaya project and will comprise of USD436 million in cash and 22.3 million new Kaz Minerals shares, representing 5.0% of current share capital of the company valued at USD239 million.
The deferred consideration of USD225 million will be paid in either cash or shares for the remaining 25% interest in the project.
"The development of this new project in Russia will enable the group to continue its industry-leading growth, delivering both value and volume as the copper market is forecast to enter a period of significant supply deficit," Kaz Minerals Chairman Oleg Novachuk said.
Kaz Minerals said the Baimskaya is one of the world's most significant undeveloped copper assets and has the potential to become a large-scale, low-cost, open-pit copper mine. The project has a JORC resource of 9.5 million metric tonnes of copper at an average grade of 0.43% and 16.5 million ounces of gold at an average grade of 0.23 grammes per metric tonne.
The company expects the project to have an annual average production over the first 10 years of 250,000 tonnes of copper and 400,000 ounces of gold, with a mine life of approximately 25 years. Capital expenditure to develop the mine is estimated at USD5.5 billion.
Shares in Kaz Minerals were trading 16% lower at 688.60 pence on Thursday morning.
Related Shares:
KAZ.LEvraz