Complex mining investments

Description of the project

Summary

JSC “KGDI” assets are the start-up of an export-oriented project for exploration, development and organization of the premium potassium fertilizer production, i.e. the Sulfate of Potash (SOP), with the rated annual capacity of 1.0 million tons of final products, based on the deposit, with the state assessment of resources of more than 3 billion tons of ore, consisting of North Krasnoborsky and East Krasnoborsky sites with total area of 30 sq.km, located in Polessky district of Kaliningrad region of the Russian Federation, Licenses for exploration and mining KLG No. 02398 TP dated 28.06.2013 and KLG No. 02478 TP dated 29.05.2015.

Sulfate of Potash is a classic type of premium class fertilizers significantly increasing the efficiency of agriculture, particularly for citrus, nightshade, tobacco cultures. It contains 50% of K2O and does not contain chloride, which is useful in general. It is sold at the price of US$ 500 per ton, as compared to the price for Muriate of Potash (MOP) of US$ 200 to US$ 300 per ton. The current global consumption of SOP is 8 million tons annually, while the annual consumption of MOP is 60 million tons. Wholesale consumers from China, India, Pakistan, and Brazil have expressed their interest in the product. It is planned to enter the market with the annual capacity of 0.5 million tons at the first production stage and 1.0 million tons at the second production stage.

 The total volume of investments into the project comprises US$ 845 million.

 Project stages: the first exploration stage is completed for now; - the second stage is a designing, extension of reserves and obtaining approvals; - the third stage is a construction and commissioning of the mine, the mining and processing plant, and the factory. The period for completion of the second and the third stages of the project is 5 years as from now.

 The required equity investments are US$ 130 million, including US$ 30 million for the second stage and US$ 100 million for the third stage, with consideration of raising debt funding at the third stage in the amount of US$ 700 million.

 This will result in a development of the production assets with the value of US$ 2.5 to US$ 3.0 billion, which generates the annual EBITDA in the amount of US$ 350 million.

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