Source - RNS
RNS Number : 1487M
Eurasia Mining PLC
10 October 2016
 

Eurasia Mining plc (AIM: EUA)

("Eurasia" or the "Company")

 

Engineering Procurement, Construction and Commissioning contract

 

Eurasia Mining (LON:EUA), the London Stock Exchange AIM listed PGM and gold mining company, is pleased to announce that an Engineering Procurement, Construction and Commissioning ("EPC") turnkey contract has been signed in relation to its Monchetundra project in the Kola peninsula in northwest Russia bordering Finland, between Eurasia's 80% subsidiary, Closed Joint Stock Company "Terskaya Gornaya Kompaniya" ('TGK') which holds the Monchetundra licence and Sinosteel, a Chinese state owned group operating primarily in mining, trading, equipment manufacturing and engineering.

 

The contract is for the development of two platinum group metal ('PGM') deposits located in the Company's Monchetundra licence area, which also contain gold, copper, cobalt and nickel. Feasibility studies are currently underway on two deposits, Loipishnune and West Nittis, to be completed by year-end. Together with the EPC contract, this will be the culmination of the Company's work since the licence was acquired in 2006. The contract provides for engineering, procurement and construction of a 1.7 million tonnes per annum PGM beneficiation project at Monchetundra.

 

Sinosteel's engineering and construction arm is Sinosteel Equipment & Engineering Co. Ltd. Sinosteel is a major mining company and the second largest importer of iron ore in China. It is one of the largest global EPC contractors with a track record of successfully commissioning similar projects in Australia, Africa, China and Latin America.

 

The proposed contract would provide for Sinosteel to undertake mine and processing plant turnkey construction and commissioning on a commercial arms-length basis. The debt-based finance for the EPC turnkey contract is to be arranged by Sinosteel and is an integral part of the EPC turnkey contract. This EPC contract is being advanced as part of discussions with third parties for the sale or joint venture of the project.

 

Sinosteel's contract is based on a 2 year due diligence and evaluation of the Monchetundra project. The principal terms of the financing are:

 

·    The contract value totals US$176,000,000 with the loan covering 85% of the contract value.

 

·    Within the contract, a subcontract for $50,000,000 million is assigned to TGK to cover all preparatory engineering and pre-strip works on the two open pit deposits. TGK expects that this subcontract will be sufficient to meet the 15% equity contribution required for the project.

 

·    Sinosteel will be responsible for the debt finance of $149,600,000 (i.e. 85% of the contract value) with the financing terms included in the EPC contract as a 10-year loan with early repayment permitted, at an indicative interest floating rate at 6 month LIBOR plus 3.5%.

 

·    Sinosteel will carry the loan on its balance sheet with its rights and obligations under the financing and the loan will only be assigned to TGK following completion of the EPC contract, subject to key performance indicators to be achieved by the plant commissioned by Sinosteel.

 

·    The contract is exclusive to Sinosteel for a period of ten years.

 

·    The contract provides for a schedule of payments commencing within 36 months. This period is to allow for the obligatory steps within the Russian mine permitting system.

 

The contract is conditional on, amongst other things, the Company receiving all the necessary permits from the government and therefore at this stage there is no guarantee that the transaction will complete. Further updates will be provided in due course.

 

Christian Schaffalitzky Managing Director of Eurasia Mining said "We have always considered Monchetundra to be an attractive project and the recent expressions of interest, including the concept of an outright proposal to acquire the project, and the desire to secure an EPC contract in relation to Monchetundra, clearly demonstrates that our judgment was well founded.

 

This contract with one of the world largest EPC contractors provides the framework for the construction of a processing plant designed to treat ore from two open pits in the Monchetundra licence area. Meanwhile our other business continues to progress; at West Kytlim, deliveries to the refinery are continuing and payment amounts for the first batch of concentrate have been agreed, while at the Semenovsky gold project, our metallurgical testing program is nearing completion. We will provide separate updates on these projects in due course."

 

Ends

 

Enquiries:

 

Eurasia Mining Plc

Christian Schaffalitzky/Michael de Villiers                      +44 (0)207 932 0418

 

WH Ireland Limited

Katy Mitchell/Nick Prowting                                         +44 (0)161 832 2174

 

Beaufort Securities

Elliot Hance                                                                  +44 (0)207 382 8300

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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