Eurasia Mining plc (AIM: EUA)
('Eurasia' or the 'Company')
Contract Mining at West Kytlim
Eurasia Mining plc, the Russia focused PGM and gold exploration and development company, is pleased to announce that is has executed an agreement with a Russian company, OOO SK Region-Story ('SKRS'), under which SKRSwill commence contract mining at Eurasia's West Kytlim alluvial platinum deposit in the Urals.
Highlights:
· The Malaya Sosnovka sub-area at West Kytlim to be developed by a engineering partner who will assume responsibility for construction and implementation of production processing, with Eurasia providing technical and managerial supervision;
· Eurasia to receive 30% of total sales achieved from this production; and
· The directors intend to focus the majority of their management and technical resources on the development of non-West Kytlim interests and notably Monchetundra, where a number of discussions are underway.
Christian Schaffalitzky, Managing Director of Eurasia Mining commented 'We are delighted to announce this transaction, which will enable Eurasia to benefit from the development of West Kytlim without having to fund the capital cost of project development from its own resources.
In addition to the financing benefits, the involvement of the contracting company, OOO SK Region-Stroy, means that management resources can be applied to the development of the Company's other interests, including Monchetundra, where we believe there is an opportunity to crystallise material value for shareholders and where we are in advanced discussions to achieve this outcome.
The contract means Eurasia will receive 30% of net revenue, and thus 30% of total sales value, with financing risk minimised while seeing Eurasia achieving a revenue stream in the near term.
Further updates will be provided at the earliest opportunity on West Kytlim and other Company interests.'
Contract Information:
The parties have signed a contract for the development of the first sub-area, Malaya Sosnovka, commencing in July 2016. Further contracts can be issued for each subsequent sub-area at West Kytlim, following the development schedule planned for the expected ten-year life of the mine.
The selected operator is the construction company, 'OOO' SK Region-Stroy, which will be responsible for providing all capital equipment and services in return for a 70% share of revenue. The 30% balance of the total revenue will be held by Eurasia's local subsidiary, ZAO Kosvinsky Kamen ('KK'). Eurasia retains all rights and interest in the West Kytlim licence.
Under the terms of the Agreement SKRS is responsible for:
- the acquisition, construction, assembly, delivery and installation of mining and processing equipment in accordance with a technical design report approved by KK/Eurasia;
- carrying out the schedule of activities including site clearance, preparatory works, stripping, mining, washing of gravels, minerals concentration, land rehabilitation and related work to produce precious metals;
- organization and maintenance of temporary living quarters, laboratory, repair shop, canteen, sanitary amenities and other facilities required for the development of the mine;
- the design, organization, construction and operation of power supply systems in the course of development works;
- the organization of secure handling of mined metals through the whole process starting from the washing of sediments through to the transfer of the concentrated metals to the refinery.
Under the terms of the contract, KK/Eurasia is responsible for:
- continuing exploration work, mainly to convert resources into reserves and obtaining the necessary approvals for these reserves of alluvial PGM and gold;
- geological and technological supervision by the KK/Eurasia's personnel of the works conducted by SKRS in accordance with the properly approved annual mining plans;
- appointment of the manager of the concentrate processing laboratory on site responsible for the technology of the recovery of precious metals from concentrates;
- sale of metals pursuant to the terms and conditions of the agreements with the refinery and authorized banks;
- payments to SKRS, to be made according to the sale schedule approved by the parties on the basis of invoices.
Background of Construction Company: OOO SK Region-Story:
ООО SK Region-Story is a diversified engineering company that grew from a state-owned enterprise operating for 60 years. The company is based in the Chelyabinsk region in the Urals. It operates as a contractor in mining, civil engineering and production of equipment for chemical and other industries. It retains a fleet of vehicles and earthmoving equipment and has experienced personnel in overburden stripping and mining as well as the manufacture, installation and operations of alluvial washing plant.
Commenting on this agreement, Christian Schaffalitzky added: 'We are delighted to begin mining without asking shareholders for financial support. We have been many years preparing this project for mining and now expect work to begin in July on Malaya Sosnovka. This is an all-diesel operation but we plan to use electrically powered equipment for later areas, a much cheaper mining method. We welcome SK Region-Stroy not just as contractor but as a partner in the development of this our first mine. We look forward to updating shareholders on the project as it progresses'.
Enquiries:
Eurasia Mining Plc
Christian Schaffalitzky/Michael de Villiers
+44 (0)207 932 0418
WH Ireland Limited
Katy Mitchell/Liam Gribben
+44 (0)161 832 2174
Beaufort Securities
Elliot Hance
+44 (0)207 382 8300
Loeb Aron
John Beresford-Peirse
+44 (0)207 628 1128