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Update - Monchetundra Mine Permit
Eurasia Mining plc (AIM: EUA)
("Eurasia" or the "Company")
Monchetundra Mine Permit - further steps following permit award
Following the Company's announcement dated 20 November 2018 made on the final award of a mining permit for the Monchetundra PGM and base metals mine, Eurasia Mining plc (AIM: EUA), the PGM and gold producing company, is pleased to offer further details of the now fully approved mine permit and the administrative steps following the final award which bring the matter to a successful conclusion.
The mine permit was awarded by government decree made public on 20 November 2018 (see RNS dated 20 November 2018). The mining permit is granted based on a previously issued discovery certificate and fully authorises mine construction at the circa 2Moz Pd equivalent state-approved reserve and resource (1.9Moz palladium dominant 2PGE as palladium, platinum and gold) with significant additional nickel and copper revenue streams. The Monchetundra Project is located adjacent to the town of Monchegorsk, 130km south of Murmansk on the Kola Peninsula, bordering Finland in Northwest Russia.
· Mine permit now fully approved and authorised by the office of prime Minister Dmitry Medvedev.
· The Company has conducted telephone communication with RosNedra, the Russian Federal agency responsible for mining, confirming that an order to issue the license documentation has been forwarded by the Ministry of Natural Resources to RosNedra and that an official document detailing the permit will be forthcoming, in accordance with standard procedure.
· The one-time license payment will also be confirmed to the Company. Payment terms are set out on a 20/80 basis, ie 20% initially and 80% within the first 5 years of mine production.
· The Monchetundra Project, with an in-situ total reserve and resource value of approximately US$2.1 billion (an internal calculation based on London Metal Exchange November 2018 spot metal prices, and prepared for guidance only) is now licensed to mine and can continue to the construction phase.
· As previously announced, an Engineering Procurement Construction & Financing ("EPCF") contract is already in place with the Chinese state-owned major infrastructure project group Sinosteel, for 85% (or US$149.6M) of a total contract value of US$176M.
· A US$50M sub-contract is specified within the contract and is assigned to Eurasia's 80% subsidiary Terskaya Gornaya Kompany ("TGK"), or a sub-contractor of its choosing, for engineering and pit development works in advance of mining.
· The mining license is the first hard rock PGM mining permit to be issued in the Russian Federation since February 2016.
· The 1.9M oz Pd eq (with a 3:1 Pd:Pt ratio in favour of palladium based on production) reserve and resource with base metals credits are now permitted for extraction at two open pit locations, West Nittis and Loipishnune (for further details see announcement dated 31 May 2017).
Christian Schaffalitzky, Managing Director and Executive Chairman for Eurasia, commented: "We are thrilled and honoured to have received the final permission required to proceed and build a mine at our Monchetundra PGM and base metals project. This permission and indeed recent milestones achieved by Eurasia with the Monchetundra Project are the culmination of many years of hard work and conviction to pursue a PGM project in an emerging PGM district and we are extremely thankful to the cooperation we have received at local and federal level in the jurisdiction we have chosen to operate in.
This is the start of a new chapter for the Company and its ambitions. Our commercial arrangements regarding the Monchetundra Project development can now be realised at this large low cost PGM and base metals project. The Company would like to thank the officials in all of the relevant ministries who have accessed the projects viability. The issue of this mining permit represents a sea change for the company, as this is a major project which the company intends to develop alongside our West Kytlim PGM and gold mine, which achieved steady state industrial scale production during 2018.
It is also significant that very few mine permits are issued for PGM projects, reflecting the lack of investment in this sector, something that we the Directors feel makes this project particularly valuable. The vast majority of permits issued in Russia are for gold projects, and it is also quite rare in the current phase of the resources cycle to find an exploration company taking a project all the way from green fields exploration through mine permitting. Now we progress onto mine development and production, at Eurasia's second mining license, based on its own discoveries, issued in less than three years.
As regards funding requirements, our arrangements with Sinosteel mean the Company can move forward with the project's development without recourse to further dilution of its shareholder base.
Finally, we note the recent price gains in Palladium to an all-time high in November 2018 ($1,219USD/oz at the time of writing (LBMA Prices)) as being particularly beneficial to the project.
It is our intention to offer specific timelines and objectives for the projects development through 2019 in due course."
The mine permit application for the Monchetundra Project has now reached a successful conclusion and the mine permit has now been granted to Eurasia's 80% owned subsidiary Terskaya Gornaya Kompany ('TGK'). The permit is granted based on a discovery certificate which was awarded to TGK to acknowledge its own self-funded exploration and development of two ore bodies within the Monchetundra Project, namely West Nittis and Loipishnune.
Eurasia began working at the Monchetundra Project in 2006 and developed the project from a green fields exploration project, initially in a joint venture with Anglo American Platinum whose interest Eurasia bought in 2014. Field work comprised extensive trenching, geochemical sampling, geophysics programs and several generations of core drilling for a total of 33km of drill core.
A decision was taken in 2016 to finalise the exploration phase of the project and to apply for a discovery certificate based on the current known resource. A feasibility study was also commissioned to Russian subsoil licensing standards and was later approved by Rosnedra.. Two open pittable resources, occurring about 2 kilometres apart, have been defined to a depth below surface of circa 200m. Loipishnune, the larger of the two open pits and carrying greater than 70% of the current resource inventory has a strike length of ca 1km and is open to the southeast and at depth. The open pits occur less than 10 km from the town of Monchegorsk, a historic mining town with ideal infrastructure including a metal refinery operated by Norilsk Nickel, which sits between the Monchetundra Project and the town of Monchegorsk.
Currently, state approved reserves and resources within the Monchetundra Project comprise Russian standard C1 and C2 categories of 59 tonnes (1.9 million ounces) palladium equivalent (2PGE + Gold with a Palladium to Platinum ratio of 3:1 based on production ounces) at two open-pittable locations, West Nittis and Loipishnune. These open pits also contain significant base metal credits including 28,124 tonnes of copper, 30,410 tonnes of nickel. The Directors believe the project to be unique globally in being led by high palladium grades, and that it represents a significant lower cost open pit mining operation which compares favourably to the relatively expensive underground operations in South Africa, the dominant player in the global PGM market.
Engineering Procurement Construction and Financing (EPCF) Contract
As previously announced, an EPCF agreement is already in place with Sinosteel, a Chinese state owned major infrastructure project group. 85 per cent (or US$149,600,000) of the contract value has been arranged as debt-based by Sinosteel - this element of plant construction costs will remain on the Sinosteel balance sheet until such time as the plant is operating at full capacity of 130,000oz per year and to designed specification. A further US$50,000,000 sub-contract has been assigned by Sinosteel to Eurasia's subsidiary Terskaya Gornaya Kompany (TGK) for the development of the two open pits in preparation for mining and may be drawn down in advance of the main mine construction.
Discussions continue with suitably qualified and experienced companies regarding contracting part of the mining operation at Monchetundra, as well as acting as owners' representative during mine construction. The Company hopes to emulate the contract mining arrangement utilised at West Kytlim, the Company's operating PGM and gold mine, by contracting the mining operation, for a percentage of gross revenue, to a reputable international specialist company with experience in Russia, while maintaining ultimate control and ownership of the project.
History of the Monchetundra Project permitting process
A feasibility study and reserves estimate for the contained reserves and resources achieved state approvals in May 2017 (see announcement dated 31 May 2017). Subsequently, a discovery certificate, which guarantees mining rights to the holder, was issued in July 2017 for the reserves and resources contained within two open pittable locations, Loipishnune and West Nittis. A mining license application proceeded directly on receipt of the discovery certificate and later achieved provisional approval from Rosnedra, the federal agency responsible for mining. The application was later reviewed by the Federal Anti-Monopoly Service before being approved by both the Federal Securities Service (FSB) and Ministry of Defence (MOD). The permit application was then approved at the Ministry for Economic Development and Ministry of Natural Resources, the ministry which governs Rosnedra. On approval at the Ministry for Natural Resources the application was forwarded to the office of the Prime Minister for final approval. This approval was made public on the 20 November 2018 at which point the permit application process successfully concluded. Official documentation necessarily follows the official granting of the license as per due process.
Consent for release
Christian Schaffalitzky, FIMMM, PGeo, CEng, is a director of the Company. He has reviewed the update and consents to the inclusion of the exploration information in the form and context in which it appears here. He is a Competent Person for the purposes of the reporting of these results.
This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.
Eurasia Mining PLC
Christian Schaffalitzky / Keith Byrne
Tel: +44 (0)207 932 0418
WH Ireland Limited (Nominated Adviser & Broker)
Katy Mitchell / James Sinclair-Ford
Tel: +44 (0)161 832 2174
First Equity Limited (Joint Broker)
Tel: +44 (0)20 7374 2212
Optiva Securities (Joint Broker)
Christian Dennis Tel: +44 (0) 20 3137 1902
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
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