Precious and non-ferrous metals

Development of Chaun-Bilibinskaya industrial zone

Project’s target

Accelerated development of industrial potential of Chukotka Autonomous Region on the basis of creation and development of energy and transport infrastructure in order to explore precious metals deposits (gold and silver) and non-ferrous metals (copper, molybdenum, stannum and tungsten) and construct industrial projects on the principles of public-private partnership.

Expected gold and silver mining up to 2020 are about 25-30 tons and 216-260 tons respectively due to the working Kupol, Karalveem and Valunistoye mines and implementation of the Mayskoye and Dvoinoye deposits (together with the Vodorazdelnaya ore property), the Stadukhinsky ore knot and the Kanchalano-Amguemskaya property. Total reserves and gold resources of the indicated mined and explored deposits comprise not less than 500 tons.

Copper and stannum will be extracted in accordance with projected feasibility study of the deposits development. Total resource reserve of copper is 24 million tons and of stannum is 508 thousand tons.

Expected result fromprojects realization

  • Growth of own income foundation;
  • Development of industrial, transport, energy and social infrastructure in strategically important (on the border with the USA) but the most distant and sparsely populated region of Russia;
  • Creation of conditions for attraction of investments in order to continue development of natural resources of Chukotka;
  • Improvement of the populations quality of life (transport access, telecommunications and safety).

Project implementation period – beginning of realization putting into operation

Project implementation: 2005- 2025.

Direction of investments

  • Construction
  • Research developments
  • Development effort

Belonging to a branch of economy

  • Extractive industry
  • Manufacture
  • Transport
  • Power engineering

Sectoral projectsbelonging

  • Mining operations
  • Transport
  • Power engineering

The following properties are included in the investmentproject:

Short projectsdescription

Mining enterprises producing gold, silver, stannum and copper.

Investors funds make up approximately 94. 8 billion rubles.

Project implementation is in accordance with developed FS;

Floating unit (Floating nuclear power station) with a capacity of 2x35MW in Pevek. Rosenergoatoms funds are 20. 4 billion rubles;

Construction of generating capacities instead of the currently operating Bilibino Nuclear power plant. Rosenergoatoms funds are 48 billion rubles;

“Bilibino Kupol” overhead power line of 110 kV. State investments make up 3.2 billion rubles;

Valunistoye Komsomolskoye overhead electricity distribution line of 110 kV. State investments make up 3.3 billion rubles;

Bilibino-Komsomolsky-Pevek overhead power line of 110 kV (reconstruction). State investments are 3.6 billion rubles;

Komsomolskoye Mayskoye overhead power line of 110 kV. State investments are 0.3 billion rubles;

Kupol Peschanka overhead power line of 110 kV. State investments make up 3. 6 billion rubles;

Energy infrastructure in Pevek (reconstruction). State investments constitute 0. 5 billion rubles;

Ugolnye Kopi-Kanchalan-Valunistoye overhead power line of 110 kV (3rd phase) of the project Construction of Anadyr heat station-Ugolnye KopiKanchalanValunistoyeEgvekinot overhead power line of 35 kV. State investments make up 1. 7 billion rubles;

Omolon-Anadyr motor road with approaches to Bilibino- Komsomolsky, Egvekinot. State investments are 154.6 billion rubles;

Highway stream rivers crossings along the developed winter motor road with prolonged service life. State investments are 2.0 billion rubles.

Place of investment projects realization

Chukotka Autonomous Region

Chaunsky Municipal District

Bilibinsky Municipal District

Information of theprojects workup

1st phase development of the Kupol, Mayskoye and Valunistoye gold deposits

Exploration of the deposit was held, reserves counting was conducted and the mine that meets international standards with allcomplex of supporting infrastructure (including airfield) was constructed at the Kupol deposit in a short space of time. Exploration of the deposit started in 2008.

Since June 2008 to January 2011 there had been mined 60 tons of gold and 621,7 tons of silver. According to the results of 2010 Chukotka takes the second place for gold extraction among the subjects of the Russian Federation thanks to ZAO Chukotka

Mining & Geological Company. The Companys share in total production of gold on the territory of the region made up 80% in 2010.

The Mayskoye deposit is one of the five largest gold deposits in Russia. Developments feasibility study expects production of 850 thousand tons of ore per year with underground mining and its flotation at the industrial zone of the deposit with the following delivery of the concentrate to Amursk for its subsequent processing at the plant of pressure leaching. In May 2010 construction of a concentration plant started at the deposit. Total expenditures for companys construction are estimated to be 170 million dollars. In addition 140 million dollars will be invested during the operation of the enterprise, starting with 2013, mainly in general mining works and technical reequipment. The first ore will be produced in the end of 2010 and the plant is planned to be implemented in the first quarter of 2012. Dispatch of the first batch of the concentrate in Amursk and receipt of the first gold are expected to be in the fourth quarter of 2012. Polimetal, OJSC plans to reach full production capacities both in ore production and its processing during 2013. In perspective an annual level of gold mining will comprise up to 6-10 tons.

The Valunistoye deposit is developed by Valunisty Mine, LLC which is the oldest and largest gold-mining company in the region. A concentration plant with a capacity of 200 thousand tons of ore per year and two opencast ore mines function in the site. More than 1 ton of gold are permanently produced here. In future it is expected to produce up to 1. 2 tons annually.

2nd phase exploration of the Dvoinoye gold deposits, the Vodorazdelnaya property

In 2010 Kinross Gold Corporation acquired the Dvoinoye gold and ore deposit and Vodorazdelnaya property. The deposit is planned to be explored with underground mining and ore to be transported for processing to the Kupol deposits gold extracting plant. The Company is planning to prepare feasibility study and receive permissive documents, including engineering and basic research during 2011-2012.

The Dvoinoye deposit exploration will make it possible to use infrastructure which has already been at the Kupol deposit more efficiently and will give an opportunity of including of ore from the Dvoinoye deposit with higher gold content in processing.

312 million rubles (funds from the federal and regional budgets, ZAO Chukotka Mining & Geological Company) are sent for construction of Komsomolskoye Mayskoye overhead power line of 110 kV. The lines implementation was 2010.

765.3 million rubles (funds from the federal budget, Prospectors artel of Chukotka, LLC and extrabudgetary sources) are sent for construction of Valunistoye Egvekinotskaya SDPS overhead power line of 110 kV. The lines implementation was 2008.

3rd phase the Baimskaya ore zones deposits exploration

Exploration works carried out at the Peschanka deposit in 2009-2010 by Baimskaya Mining Company, LLC and search and evaluation works such as geochemistry and geophysics in the framework of the Baimskaya ore zone (the Peschanka deposit is in its center) made it possible to estimate its resource potential in 27 million tons of copper and 1600 tons of gold. In 2011 about 80% of industrial reserves of the Peschanka deposit (5-6 million tons of copper and 250-300 tons of gold) one of the deposits of the Baimskaya ore zone will be booked on the balance sheet. Since 2014 to 2018 assessment of the whole Baimskaya ore zone will have been completed and its total reserves and resources will have been calculated. In perspective construction of a large mining complex is seen on the basis of the Baimskaya zones deposits and in the first place on the Peschanka one.

Social and economic effect of the projects realization

10. 3 thousand workplaces taking into account engaged workers in the period of construction.

Total projects value

Total investments are 336. 0 billion rubles:

Funds of Rosenergoatom Concern, OJSC make up 68.4 billion rubles;

State investments are 172. 7 billion rubles (share participation in construction of transport and energy infrastructure) including construction of Omolon-Anadyr motor road 154.6 billion rubles;

Funds of Kinross Gold Corporation (Canada) for the Kupol deposits exploration make up 25.5 billion rubles (gold-extracting plant, mine, warehouses of fuels and lubricants, trailing dump, airfield and camp were built);

Funds of Polimetal, OJSC for the Mayskoye deposits exploration are 9.3 billion rubles (carried out and planned)

Funds of Kinross Gold Corporation (Canada) investor for exploration of the Dvoinoye deposits and Vodorazdelnaya property are in accordance with developed FS;

Sources of projects investment with indication of total financing

Total investments are 336.0 billion rubles, including:

Private investments are 94.8 billion rubles;

Funds of Rosenergoatom are 68.4 billion rubles;

State investments are 172.8 billion rubles.