(Alliance News) - Kaz Minerals PLC on Wednesday said the risks around its Baimskaya copper project in Russia's Chukotka region have been increased by new infrastructure plans for the region passed by the Russian government.
Kaz Minerals is a copper company focused on large-scale, low-cost open-pit mining in Kazakhstan.
Kaz Minerals is currently in discussions with the Russian government regarding the provision of transport and power infrastructure in the Chukotka region, for which the company may be liable to pay.
This follows the Ministry for the Development of the Russian Far East & Arctic approving a multi-party complex development plan for new infrastructure in the region. This was submitted by the ministry on Wednesday for approval by Russian Prime Minister Mikhail Mishustin.
"Under the CDP, Kaz Minerals will now take responsibility for a portion of the infrastructure capital costs. Together with a revised cost for the tailings storage facility and the impact of an approximate one year delay to the project schedule, the capital construction budget for the Baimskaya project is now estimated to be close to USD8 billion," Kaz Minerals said.
Given the changes in the infrastructure plan, Kaz Minerals said its Baimskaya project's bankable feasibility study has been delayed and now is expected to be completed in the first half of 2021.
Senior Independent Director Michael Lunch-Bell said: "The complex development plan for Chukotka submitted today within the Russian government has resulted in higher infrastructure costs and a delay to the bankable feasibility study."
The Baimskaya project is now expected to commence production by the end of 2027 and have an annual ore processing capacity of 70 million tonnes per annum.
Kaz shares were down 1.5% at 640.00 pence each in London on Wednesday morning.
By Greg Roxburgh; gregroxburgh@alliancenews.com
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