Russian gold and iron ore miner Petropavlovsk PLC (Petropavlovsk) has announced that in 2010 it expects to spend around $84 million in furthering the development of its operational iron ore asset Kuranakh and of its iron ore projects Kimkan and Sutara (K&S) and Garinskoye.
"We continue to believe that our iron ore business is a source of significant potential value and will be a major contributor to our value creation," said the company in its statement.
Petropavlovsk's major planned capital expenditure by project for 2010 is as follows:
2010 |
|
Kuranakh |
$26 million |
K&S and Garinskoye |
$50 million |
Other |
$8 million |
Total |
$84 million |
As SteelOrbis previously reported, on March 23, 2010, Petropavlovsk agreed the terms of an up to $500 million term-sheet for the funding of stage 1 of its K&S iron ore mining operation in Russia's Far East with the Industrial and Commercial Bank of China (ICBC), and entered into a cooperation framework agreement for the implementation of the K&S and Garinskoye projects with the Chinese National Electric Equipment Corporation (CNEEC).
In 2009, Petropavlovsk spent an aggregate of $56.1 million on its iron ore projects. The key area of focus last year was construction of Kuranakh ($34 million) and K&S development ($19 million).
Currently, the construction of the Kuranakh iron ore project is nearing completion. Petropavlovsk expects to ramp up production during the second quarter of 2010 and to be producing at full capacity from the start of the second half of 2010.
Stage 1 of the K&S project development contemplates a ten million mt per year mining operation, yielding 3.2 million mt per year of 65 percent iron ore concentrate with commercial production to be started in 2013. Total capital expenditure is estimated at $400 million. Initially, the processing plant is expected to have a designed capacity capable of processing ten million mt per annum of run-of-mine ore from the Kimkan deposit. Meanwhile, stages 2 and 3 of the project envisage the development of the Garinskoye deposit and the further beneficiation of 65 percent concentrate to a form of metalized nuggets.
The Garinskoye deposit, with almost 400 million mt of JORC compliant ore reserves and mineral resources (and further expansion opportunities thereafter), will contribute to an expanded iron ore concentrate output of 8.3 million mt per annum with pre-concentrate produced at site and then transported to an expanded 20 million mt per annum ore capacity beneficiation plant at K&S.
"Given the advantageous location close to the border with China and the expected long-term strength in the Far East Asian iron ore markets, the K&S iron ore concentrate will prove to be a highly competitive product and generate significant long-term cashflows for the group," Petropavlovsk said in its statement.