EVRAZ Announces Acquisition of the Stake in Timir Iron Ore Project
2 April 2013 - EVRAZ plc (LSE: EVR) ("EVRAZ") announces that it signed an agreement to acquire the stake in OJSC "Timir" ("Timir") for a total consideration of RUB4,950 million (approximately US$160 million) to be paid in several instalments. At completion EVRAZ will receive 51% stake in Timir, OJSC "Alrosa" ("Alrosa") will own 49% minus one share and Vnesheconombank ("VEB") will receive one share.
Timir is a joint venture between EVRAZ and Alrosa created for the development of iron ore deposits and is currently holding licences for 4 iron ore deposits (Tayozhnoye, Desovskoye, Tarynnakhskoye and Gorkitskoye) in the southern part of Yakutia in Russia with total mineral resource base under the Russian geological classification of 3.5 billion tonnes (Russian geological categories of A+B+C1).
The first phase of the Timir project involves development of the Tayozhnoye deposit with total mineral resources under the Russian geological classification of 341 million tonnes of iron ore (Russian geological categories of A+B+C1) and grades of 38-40% Fe. The Tayozhnoye deposit is located 150 km north of Neryungri city, an important industrial centre in the southern part of Yakutia, and close to the existing infrastructure - a railroad, power grid and a paved road. The mining capacity of the Tayozhnoye open pit is estimated at 15 million tonnes of iron ore per annum. Convenient geographical location of the Tayozhnoye deposit on a railway connected to the TransSiberian railroad provides for competitive delivery of iron ore products to EVRAZ ZSMK and Southeast Asian countries through the Far East of Russia.
Total investments in the first phase of the Timir project are estimated to amount to approximately US$1.8 billion during the period from 2013 to 2018. EVRAZ and Alrosa are expected to finance the Timir project on a pro rata basis. Upon completion of the feasibility study of the first phase, Timir may apply for funding on a project finance basis.
The implementation of the whole Timir project should eventually create 11,000 new jobs including 4,000 positions at the Tayozhnoye ore mining and processing plant.
Alexander Frolov, EVRAZ's CEO, commented, "The large iron ore resources of Timir in combination with proximity to the existing infrastructure provide for the efficient development of the project as a low cost operation. The realisation of the Timir project is an important milestone of the Company's strategy for securing a raw materials base for EVRAZ ZSMK, and is envisaged to eventually replace the gradually depleting reserves of Evrazruda over the next 5-10 years."
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Media Relations:
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EVRAZ is a vertically integrated steel, mining and vanadium business with operations in the Russian Federation, Ukraine, USA, Canada, Czech Republic, Italy and South Africa. EVRAZ is among the top 20 steel producers in the world based on crude steel production of 15.9 million tonnes in 2012. In 2011 EVRAZ sold 15.5 million tonnes of steel products. A significant portion of the company's internal consumption of iron ore and coking coal is covered by its mining operations. The company's consolidated revenues for the year ended 31 December 2011 were US$16,400 million, and consolidated EBITDA amounted to US$2,898 million. The H1 2012 consolidated revenue was US$7,619 million and the H1 2012 EBITDA was US$1,175 million.
