Eurasia Mining PLC Projects update (1768O)
03 November 2016 - 6:00PM
UK Regulatory
TIDMEUA
RNS Number : 1768O
Eurasia Mining PLC
03 November 2016
Eurasia Mining plc (AIM: EUA)
("Eurasia" or the "Company")
Projects Update
The Company is pleased to update shareholders on progress on its
three projects in Russia. Eurasia's West Kytlim platinum and gold
project is now in production, first shipments of concentrate began
in early September (see RNS dated 9 September 2016). The
Monchetundra Project is in late stage development and has been
bolstered by an Engineering, Procurement, Construction and
Commissioning ("EPC") contract with Sinosteel Equipment and
Engineering Co Ltd, while the Semenovsky Gold in Tailings Project
remains under review as metallurgical test work for cyanide gold
recovery nears completion.
Monchetundra, Kola Peninsula, NW Russia
As announced on Monday 10 October 2016, Eurasia has signed an
EPC contract between Sinosteel (one of the largest Chinese
stated-owned engineering groups), and Terskaya Gornaya Kompaniya
('TGK'), Eurasia's 80% subsidiary which holds the Monchetundra PGM
licence near Monchegorsk, an industrialized area of the Kola
Peninsula close to the border with Finland.
- Under the terms of the EPC contract, Sinosteel has undertaken
to build a processing facility capable of treating 1.7 million
tonnes per annum from two open pits within the Monchetundra licence
and capable of extracting 130,000 oz of platinum equivalent per
annum. The contract value totals US$176,000,000 with a
US$50,000,000 subcontract assigned to TGK in respect of preparatory
and pre-strip works.
- Sinosteel is to be responsible for debt finance covering 85%
of the contract value with debt obligations assigned to TGK when
the facility achieves production of 130,000 oz PGM equivalent per
annum. The loan is assigned to TGK only on successful completion of
the works such that Sinosteel are motivated to achieve design
capacity on schedule. Interest is charged at a floating rate of 6
month LIBOR +3.5% per annum and the loan term set at 10 years with
no penalty for early repayment.
- Following the success of the royalty-like structure signed and
implemented on the West Kytlim project, Eurasia has entered into
talks with an international engineering company to manage the
mining operation at the Monchetundra project, and to work for the
company as the owner's representative throughout the design and
build phase of the Sinosteel EPC agreement and thereafter during
the operation of the mine. It is envisaged that the structure used
successfully at West Kytlim, where the mining operation is
outsourced for a split on revenue, can be replicated at the
Monchetundra project. Further updates will be made in due
course.
West Kytlim, Urals
Mining and production of platinum continues at West Kytlim, with
weather not stopping production and the forecast reasonable for the
coming weeks. The Company will provide details of the final
production figures and projected income on completion of the
season's works. The trial mining operation has tested two
washplants, one owned by Eurasia and refurbished on site, and
another larger plant supplied by the contractor SK-Region Stroy.
The information pertaining to the constitution and washability of
gravels gained from these exercises will be instrumental in
ensuring a smooth path to next season's production, as we approach
the close of this year's mining season.
Semenovsky Tailings Project, Urals
Metallurgical testwork continues to investigate the details of
the tailings composition, in view of the material being sourced
historically from three mines with different mineralogy. This work
will be completed shortly and then form the basis of an assessment
by metallurgists for the optimal production route. Work is being
carried out at SGS Chita and further announcements will be made in
due course.
MD Christian Schaffalitzky commented:
"We have endeavored to replicate the structure, which has been
proven to work at West Kytlim, at the Monchetundra Project with an
additional contract to cover the considerable capital outlay. We
believe this presents a route to project development which
minimizes exposure for Eurasia, further shareholder dilution, and
allows the project to be developed despite a continuing resource
sector downturn.
We believe the transaction is very much on trend considering
Sino-Russian relations over the past number of years. Chinese firms
are increasingly active in the Russian market in rare earths, PGM,
base metals and precious metals. It was our intention to capitalize
on this evolving relationship and to offset some of the development
risk to a suitably qualified and experienced engineering firm with
considerable banking and political reach. Sinosteel is, under the
terms of the contract, highly motivated to deliver the plant as
stipulated in the contract, because they will be responsible for
$150 million until they reach the production level of 130,000 oz of
platinum equivalent per annum.
Further outsourcing the running of the mine to an international
company with experience in operating mines is now a top priority
for Eurasia. Engaging such a group to act as owner's representative
during plant construction aims to ensure the plant is built in line
with best international practice. We look forward to updating on
developments in this regard in the near term."
Enquiries:
Eurasia Mining Plc
Christian Schaffalitzky/Michael de Villiers
+44 (0)207 932 0418
WH Ireland Limited
Katy Mitchell/Nick Prowting
+44 (0)161 832 2174
Beaufort Securities
Elliot Hance
+44 (0)207 382 8300
This information is provided by RNS
The company news service from the London Stock Exchange
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