It has been a slow yet steady journey, but Amur Minerals Corporation (AIM:AMC) has finally found treasure. Ever since its acquisition of the Kun-Manie nickel and copper sulphide project in 2004, the company has been working hard on investigating the 950-square kilometre area, which was classified as a “deposit of federal significance” by the Russian government. Now, ten years of exploration in the far east have revealed rewards – mineralised deposits in Amur Oblast, namely: Ikenskoe, Vodorazdelny, and Maly Krumkon.
The total ore reserves in this area contain 39.2 million tonnes of ore at a 3:1 stripping ratio, with nearly 80% of it mineable. The ore reserves can further be broken down into 219,100 tonnes of nickel and 58,100 tonnes of contained copper, making Kun-Manie part of the top twenty nickel sulphide projects in the mining industry today. It must also be noted that significant amounts of platinum and palladium byproducts are present (exceeding five tonnes each).
Per the company’s extensive Reserve Statement (which was subsequently submitted to the London Stock Exchange), the computation of its Earnings Before Income, Tax, Depreciation and Amortization (EBITDA) at current market price is around $732 million. The breakdown is as follows:
- Nickel is at $8.50 per pound, with a total of $18,730 per tonne
- Copper is at $3.25 per pound, with a total of $7,160 per tonne
- The Ikenskoe / Sobolevsky deposit is at $232.3 million
- The Maly Kurumkon / Flangovy deposit is at $301.6 million
- The Vodorazdelny deposit is at $197.9 million
Two more deposits are said to have been identified: Gorny and Kubuk. Meanwhile, other developments for the project are: plant relocation to increase haulage distances, metallurgies to learn the level of concentrate per commodity, and increase in rail transport costs, among others. These have substantially added to the operating costs of Kun-Manie, increasing the average cost of ore per tonne, from $20 to $42.12.
Robin Young, AMC’s CEO, talks about the company’s plans: “In light of the fact that there are presently 70 million tonnes of inferred resource not available for inclusion in our current reserve assessment and that our historical infill drill success rate has been high, we anticipate an opportunity to take advantage of the economy of scale by increasing the annual production rate at Kun-Manie.”
Moving forward, AMC is waiting for Rosnedra, the agency in charge of the mining license process, to complete the final stages of the company’s application. It has already gone through the following verifications: as a legitimate registered business in Russia, as a company with financial integrity and ethics, as a viable resource that would not endanger the country in any way, and as a financial entity that can help boost economic development.
It is currently being reviewed by the Ministry of Natural Resources. Hopefully the next step is the final authorization, to be given by Prime Minister Dmitry Medvedev.
Amur Minerals is listed on the London Stock Exchange. It last closed at $7.13 per share on 21 November, up by +0.46 points (6.90%).