VEB.RF, Sberbank, Gazprombank to cover 70% of $3 bln Udokan proj

SOCHI, Feb 15 (PRIME) -- Russian state banks VEB.RF, Gazprombank, and Sberbank will provide financing to Baikal Mining Company belonging to billionaire Alisher Usmanov that would cover up to 70% of a U.S. $2.9 billion Udokan copper deposit, Baikal Mining Company said in a statement on Friday.

The shareholders of Baikal Mining Company have already invested 28.5 billion rubles and they will cover at least 30% of the project’s total cost. A syndicate of Russian banks will provide financing under project financing factory principles through direct tranches and subsidization of interest rate, the statement read.

The company will spend the 12-year syndicated loan to finance investment and operating costs, including construction works and procurement of equipment. VEB.RF will account for 20% of the loan, while Gazprombank and Sberbank will account for 40% each. All ruble tranches under the loan encompass a state subsidy to compensate the increase of the interest rate, the company said.

Chairman of Baikal Mining Company’s Board of Directors Valery Kazikayev told reporters that the banks will not become shareholders of the project. “Many things can happen, business is business. But we don’t expect that to happen now, we are building the plant on our own,” he said.

The Udokan deposit is one of the world’s largest copper deposits located near the Baikal Lake. The deposit’s mineral resources are estimated at 2.3 billion tonnes with an average copper content of 1.06%, and copper of 24.6 million tonnes under JORC. The first stage is planned to be launched in 2022.

In late January, Kazikayev said that the company will take a U.S. $1.40–1.45 billion loan from Russian banks to finish construction of a plant at the Udokan.

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