Kaz Minerals updates plans for Baimskaya Project

The FTSE 250 company said that prior to the disruption, equipment and materials were delivered to the site for the pioneer works scheduled to take place during the year.

Activity was expected to resume “in due course”, and the group's capital expenditure guidance of $150m (£118.56m) for 2020 remained in place.

Kaz said progress on the bankable feasibility study had also been impacted by Covid-19 related issues, with teams in Moscow and Vancouver required to work from home and restrictions on both domestic and international travel.

The company and the Russian government were still working together on details of the power and transport infrastructure required for the operational phase of the project, including potential take-or-pay agreements.

Due to the additional time required to finalise the infrastructure plan for the project, including Covid-19 related delays, the bankable feasibility study was now expected to be completed by the end of 2020, the board said.

Based on the results of ongoing drilling campaigns and work completed on the bankable feasibility study to date, some of the key parameters of the Baimskaya Project had changed since those announced at the time of acquisition, Kaz said.

It explained that drilling results indicated a potential increase in mineral resources, which would lead to an extension of the mine life, previously guided at around 25 years.

Project economics were also optimised by increasing design capacity for the concentrator from 60 million tonnes per annum (Mtpa) to 70 Mtpa of ore processed, reflecting the expectation of increased mineral resources and the latest available technology from equipment suppliers.

The current construction plan for the processing plant would ramp up the two lines in consecutive phases around 12 to 18 months apart, reducing the peak funding requirement when compared to a simultaneous startup.

Finally, the estimated capital budget for the Baimskaya project had increased to around $7bn, following more detailed costings during the bankable feasibility study work and due to the additional plant and equipment required to deliver increased ore volumes for the new concentrator design, including a larger mining fleet, maintenance facilities and site accommodation.

Around 10% of the capital budget was expected to be incurred after production commenced from the first line.

The timetable for construction remained around seven years, Kaz said, with further details on the project timetable, capital expenditure, production guidance and operating costs to be published upon completion of the bankable feasibility study.

Discussions would then be further progressed with potential lenders, and the group will also assess opportunities for partnering on the project.

“We are working to develop our execution strategy for the delivery of the Baimskaya copper project, one of the world's largest undeveloped copper assets,” said chair Oleg Novachuk.

“Study work and drilling completed so far at Baimskaya indicates that a larger project will unlock the potential of the world class Peschanka deposit.

“We look forward to updating the market with the details of the bankable feasibility study when it is completed later this year.”