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IG Copper & Freeport to start its Russian copper-gold mine project

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In 2015 the Russian State Commission for Reserves of Commercial Minerals had approved Malmyzhskoe reserves at the level of 278 tonnes of gold (9.8 million ounces) and 5.6 million tonnes of copper.

The US Freeport-McMoRan and Canadian IG Copper plans to start the development of Malmyzhskoe copper-gold field, one of Russia’s largest copper and gold fields, this year, according to sources close to the companies and the Russian Ministry of Industry and Trade.

This will take place in the case of granting of all the needed permissions to the companies for the development of the field from the national government, which is planned for the coming months.

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The development of the field will be carried out  by Amur Minerals, a joint venture of Freeport-McMoRan and IG Copper, where the latter holds a controlling stake.

To date, the companies have already started preparations for the development of the field through the investing 1 billion rubles (US$15 million) in its geological exploration.

The development of the field could be beneficial for investors, due to its large reserves and despite the fact that its ores are characterized by relatively low metal content.

This is reflected by recent statements of Sergey Donskoy, Russia’s Minister of Natural Resources, according to which Malmyzhskoe currently remains of the largest metals’ fields, discovered in Russia in 2015 and enjoys great demand from foreign investors.

In 2015 the Russian State Commission for Reserves of Commercial Minerals had approved Malmyzhskoe reserves at the level of 278 tonnes of gold (9.8 million ounces) and 5.6 million tonnes of copper.

Thanks to its large reserves, the Malmyzhskoe field is currently positioned as a field of federal importance, that means that its development by foreign investors could be started only after the receive of the permission from the Russian State Commission on Foreign Investments, a special state commission, which issues permissions on the operations of foreign investors in Russia.

Both Freeport-McMoRan and IG Copper believe that such a permission may be provided already in the coming weeks, as in recent years the Russian government has significantly eased its state policy in the field of mining. For example last May the government had granted a license for the development of the nickel-copper field Coon Magnier in the Amur region to the UK investors, while several days ago a similar permission was provided to Swiss Molumin AG.

In the latter case, Molumin AG received a right for the acquisition of the 75% stake in the “Geotechnology”, a Russian company, which owns licenses for the development of nickel, copper, cobalt, gold and palladium fields in in Kamchatka region.

In the case of Malmyzhskoe, planned volume of investments in the development of the field is estimated at US$ 1.5 billion.

According to earlier statements of Thomas Bouwens, president and CEO of IG Copper and Amur Minerals, in the case of granting of state approvals, Amur Minerals will begin a search of co-investors for the project, that will be offered to acquire a stake in the Malmyzhskoe.

Both Freeport-McMoRan and IG Copper put big hopes for the project, despite the current low prices for metals in the global market and the predicted strengthening of the Russian currency – ruble (after rapid devaluation earlier this year) which may seriously reduce the competitiveness of the project, in terms of costs.

Source: Investorintel

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