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April 02, 2013

Metals of Eastern Siberia Corporation Ltd. has attracted Chinese investors to Buryatia

Metals of Eastern Siberia Corporation Ltd. has attracted Chinese investors to Buryatia by concluding Agreement on principles of financial cooperation between China Development Bank Corporation (CDB), China Nonferrous Metal Industry’s Foreign Engineering and Construction Co., Ltd. (NFC) and Metals of Eastern Siberia Corporation Ltd. of Russia.

The signing ceremony took place in Moscow on 22 March 2013 in the framework of the first visit of new Chinese leader Xi Jinping to Russia, and in the presence of Dmitry Rogozin, Russian Deputy Prime Minister and Wang Yang, Vice-Premier of the PRC State Council. On behalf of the Russian party the Agreement was signed by Ilya Okhtyrskiy, the MBC Corporation General Director, on behalf of the Chinese party, it was signed by Wang Hongqian, the NFC General Manager, and Zheng Zhijie, the CDB President.

The Agreement provides for the establishment of a joint venture between MBC Corporation and NFC to develop the polymetallic “Ozernoe” deposit in the Republic of Buryatia and in the construction of the Ozerny Mining & Processing Plant. Under its terms the NFC will acquire 50% share in the “Ozernoe” Project. The Parties have agreed that the total amount of investments in the construction of the Ozerny Mining & Processing Plant shall be up to 1,5 USD billion.

The Agreement also provides for loan financing of Ozerny GOK construction by CDB.
The MBC Corporation will conclude an integrated EPCM (Engineering, Procurement and Construction Management) contract, as well as an off-take contract for Ozerny GOK output.

The signing of the Agreement was preceded by two years of negotiations. On the part of NFC there was a lot of work to review the project, legal and financial Due Diligence have been successfully completed with the assistance of Ernst & Young and a number of consulting companies of China. On April 28 2012 MBC and NFC signed a Framework agreement. The Chinese company has also fulfilled technological testing of ore samples from “Ozernoe” deposit, its positive results have been obtained.

After signing of the Agreement it is planned to visit the site of Ozerny GOK in the republic of Buryatia, meet with the leaders of the republic, representatives of National Khural and Viktor Tolokonsky, the Presidential Plenipotentiary Envoy to the Siberian Federal District.

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