OREANDA-NEWS. September 09, 2011. OJSC MMC Norilsk Nickel (“MMC Norilsk Nickel” or “the Company”) continues the implementation of a multi-facet project of a public-private partnership involving mineral resources development in Zabaikalye Territory. In accordance with the approved financing schedule, in 2011 the Company is to invest RUB 7.4 bln. in the construction of the railway that will connect Naryn-1 (Borzya) with Gazimursky Plant, reported the press-centre of Norilsk Nickel.

The designing of mining and processing plant at Bystrinskoye deposit is currently under way and is to be completed in Q1 of 2012. The general designer for Bugdainsky mining and processing plant is being selected. All the works are performed in compliance with the approved plans and the Company fulfills all its obligations under the project. 

The railway construction is to be completed by 2012. The construction of mining and processing plants will commence in 2012-2013 and will be completed upon phased commissioning of the production facilities over the period of 2015-2016.

This is a national-scale investment project to be implemented within the framework of a public-private partnership by two partners: Investfund of the Russian Federation and MMC Norilsk Nickel. Total investments in the project will amount to RUB 104.597 bln**. MMC Norilsk Nickel’s investments will exceed RUB 80 bln., out of which RUB 72,358.04 mln. will be invested in the development of Bystrinskoye and Bugdainskoye mineral deposit by MMC Norilsk Nickel alone and RUB 8,059.98 mln. will be spent on the construction of a 223 km railway line from Naryn-1 station (Borzya) to Gazimursky Plant. Investfund will provide RUB 24,179.96 mln. for railway construction.

Expected annual production under the project:
Bystrinsky GOK:

Copper in concentrate – 62 ktpa

Gold in concentrate – 6.3 tpa
 
Iron in concentrate – 2,113 ktpa

Bugdainsky
GOK:

Molybdenum in concentrate – 9.8 ktpa

* “Chita Region” in the previous project name was substituted by” Zabaikalye Territory”after formation of a new constituent entity of the Russian Federation
** at the relevant year prices, VAT inclusive

Background:
In June 2007, MMC Norilsk Nickel and Federal Railway Transport Agency of the Russian Transport Ministry (Roszheldor) signed an investment agreement covering the construction of transport infrastructure for the development of mineral deposits in the southeast of Chita Region. The agreement provided for the construction of Naryn – Lugokan railway line and development of five mineral deposits: Bystrinskoye, Kultuminskoye, Lugokanskoye (copper sulphides), Solonechenskoye (antimony – gold) and Bugdainskoye (gold – molybdenum – porphyry). 

It was envisaged that 69% of the railway construction costs would be financed by the Russian Investfund and 31% by MMC Norilsk Nickel. Industrial development of mineral deposits was supposed to be carried out solely at Norilsk Nickel’s expense. 

As became evident in the course of on-site exploration that took place along with economic environment deterioration, three mineral deposits out of five initially selected could not ensure a viable rate of return. Having analyzed the situation, the Company suggested that the Russian government revise the project parameters so as to shorten the railway line and exclude three uneconomic mineral deposits from the scope of the project. Coordination of these modifications with interested ministries and agencies was completed in summer of 2010, and on October 25, 2010 a governmental decree was signed confirming the changes in the investment project certificate.