NLMK (LSE: NLMK) has won the right to explore and develop the Zhernovki Gluboki plot of the Zhernovskoye coal deposit located in the Kemerovo region, Siberia, located just below the Zhernovskoe-1 deposit already owned by NLMK. The license fee is RUR420 million.
The 13.5 sq km plot has 73 million tonnes of on-balance reserves of high-quality hard coking coal (grade Zh, Russian categories of reserves B+C1). It is located in the territory of the Novokuznetsk and Prokopjevsk regions. It has exit to the surface and is located below the Zhernovskoye-1 plot that NLMK already holds a license for. In 2005 NLMK won the bid to develop Zhernovskoye-1 with an adjusted on-balance reserve of grade Zh, GZh, GZhO coals of 163 million tonnes.
As part of its development program, NLMK plans to invest over RUR1 billion to design and prepare the construction of the Zhernovski Mining and Beneficiation Plant in 2011.
Development of the two plots (Zhernovski Gluboki and Zhernovski-1) in a single scheme (the Zhernovski Mining and Beneficiation Plant) will allow to share costs for the construction of a common infrastructure using best available technologies compliant with all modern security requirements, enhance production capacities, and improve technical and economic performance of the operations. Moreover, integrating newly acquired reserves will substantially improve a mine life of the deposit.
The project to develop the Zhernovski Mining and Beneficiation Plant is in line with NLMKs strategy aimed at enhancing the long-term efficiency and sustainability of its business by increasing integration into the production of high-quality raw materials.