Baimskaya project update

KAZ Minerals today announces updated parameters for the Baimskaya Project, based on feasibility study work completed to date.

Work at the Baimskaya site in the second quarter has been limited due to measures taken to control the spread of the Covid-19 virus in the region. Prior to the disruption, equipment and materials were delivered to the site for the pioneer works scheduled to take place during the year. Activity is expected to resume in due course and the Group’s capital expenditure guidance of $150 million for 2020 remains in place.

Progress on the Bankable Feasibility Study has also been impacted by Covid-19 related issues with teams in Moscow and Vancouver required to work from home and restrictions on both domestic and international travel.

The Group and the Russian government are continuing to work together on the details of the power and transport infrastructure required for the operational phase of the project including potential take or pay agreements. Due to the additional time required to finalise the infrastructure plan for the Project, including Covid-19 related delays, the BFS is now expected to be completed by the end of 2020.

Based on the results of ongoing drilling campaigns and work completed on the BFS to date, some of the key parameters of the Baimskaya Project have changed since those announced at the time of acquisition:

  • drilling results indicate a potential increase in Mineral Resources which would lead to an extension of the mine life, previously guided at around 25 years;
  • reflecting the expectation of increased Mineral Resources and the latest available technology from equipment suppliers, project economics are optimised by increasing design capacity for the concentrator from 60 Mtpa to 70 Mtpa of ore processed;
  • the current construction plan for the processing plant will ramp up the two lines in consecutive phases around 12 to 18 months apart, reducing the peak funding requirement when compared to a simultaneous startup; and
  • the estimated capital budget for the Baimskaya project has increased to around $7 billion1 following more detailed costings during the BFS work and due to the additional plant and equipment required to deliver increased ore volumes for the new concentrator design, including a larger mining fleet, maintenance facilities and site accommodation. Around 10% of the capital budget is expected to be incurred after production commences from the first line.

The timetable for construction remains around seven years. Further details on the project timetable, capital expenditure, production guidance and operating costs will be published upon completion of the BFS. Discussions will then be further progressed with potential lenders and the Group will also assess opportunities for partnering on the Project.

Oleg Novachuk, Chair, said “We are working to develop our execution strategy for the delivery of the Baimskaya copper project, one of the world’s largest undeveloped copper assets. Study work and drilling completed so far at Baimskaya indicates that a larger project will unlock the potential of the world class Peschanka deposit. We look forward to updating the market with the details of the Bankable Feasibility Study when it is completed later this year.”

 

1 Capital budget is estimated in nominal terms based on 100% share of development capital expenditure, subject to confirmation in further study work.

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