Mastering of Oktyabrskiy ferromanganese deposit

General details of the project

  • Initiator of the project: Fund for Regional Development of the Republic of Buryatia
  • Сontact person: Botoev Konstantin
  • Post: Project manager in mineral resources sector
  • Telephone/Fax: +7 301 2 21-11-49, +7 301 2 21-11-50, +7 301 2 21-11-51
  • E-mail: info@frr-rb.ru
  • Address of the site: Republic of Buryatia, Eravninskiy District

Basic details of the project

The deposite is located in the Eravninskiy district of the Republic of Buryatia, 1.5 km north-east from the Ozernoe pyrite-polymetallic deposit. The distance to the nearest railway - Mogzon railway station - 160 km, to the highway Ulan-Ude - Bagdarin - 30 km. Along this road passes 110 kV transmission line.

The Oktyabrskiy ferromanganese deposit is studied on exploration stage. It is a ferromanganese hat, developed by mangan-siderite rocks broke auto magmatic breccia body plagioliparitovyh porphyry. Area development of the oxidation zone 1500х150-350 m, depth development - 64 m. In the oxidation zone chemically is divided three main types of ore: manganese, ferromanganese and manganese-iron: manganese content in them is from 7.0 to 45.03%, iron content is from 5.8 to 48%, phosphorus is practically absent (0.02%), the silica content is rather high - from 3.9 to 21.76%, calcium oxide – from 0.21 to 8.25%. The structure of the ore deposits is a linzoplastoobraznaya form with pinches, swelling and branching. Textures ores: primary - spotty and colloform, secondary - wireframe, powdery, reniform and sinter-shelly. Structures ores: kololloidal and metacolloidal, gel, cryptocrystalline, concentrically zoned.

Washability ores is studied in two laboratory samples at the institute "Mekhanobr" and JSC "Russian manganese." As a result of studies are obtained the collective ferromanganese concentrates with an iron content from 10.1 to 25%, manganese from 37.0 to 39.0% including 16.3% of the concentrate with a manganese content 41 - 49%. Exit concentrate - from 39.1 to 57.2% and the recovery of manganese - 65.1%, iron - 66.7%. The resulting concentrate can be used in batch of sintering plants, the sinter of these plants is used in blast-furnace process for cast iron with a high content of manganese.

The reserves of the deposit on the results of the prospecting and evaluation works (1993 - 1999 г.) are calculated by the Bur TCNR (Minutes № 130 of 28.12.1995) at cut-off grade content of manganese of 7.0%.

Reserves are classified by C2 category in the amount of: ore - 5961 thousand tons, manganese - 589 thousand tons at an average grade of 9.9%, iron - 1950 thousand tons at an average grade of 32.7%. Resources of P1 category: ore - 527 thousand tons, manganese - 49 thousand tons, iron - 202 thousand tons. According to the complexity of the geological structure the deposit belongs to the group III.

Mining of all reserves of the deposit is possible by open method to a depth of 65 m. The organization of operating company with an annual output of 200 thousand tons of ore per year is possible, while the annual output of bulk concentrate is of 80 thousand tons.

Specific production costs for mining and processing of 1 ton of ore (in view of the projected capacities, deflator index of reduction of spending values to the value of 2011) amount to 950 rubles (adopted by analogy with the Krasnokamenskiy mine group).

The volume of capital investments in the amount of 1.106 million rubles is adopted by analogy with the Selezenskiy deposit (Kemerovo region) in view of the costs of maintaining capacities and deflator index of reduction of spending values to their current value.

The price of bulk concentrate (according Metalltorg) is adopted at the level of 6055 rub. / tons (excluding VAT).

The main technical and economic indicators and the results of the valuation of this deposit are shown in Table.

Analysis of the impact of changes of the value of the investments to the internal rate of return of the project allows for the conclusion that on the Oktyabrskiy deposit the value GNI falls below the critical level of 10% with an increase in the amount of investment costs to 911 million rubles (up to 2.017 million rubles). In relative terms, this increase in capital expenditures amount to 82.4% of the base value of investment costs.  Adjusted for risk (at a discount rate of 20%), this project will retain its investment appeal only if the capital investment will be increased by not more than 179 million rubles. (up to 1.285 million rubles.). In relative terms, this increase in capital expenditures amount to 16.2% of the base value of investment costs.

 

Technical and economic indicators of the Oktyabrskiy deposit (Calculation 2011)

Data

Units ofmeasure

 Version

Basic

IRR 20%

Geological ore reserves (reduced to the category С1)

ths. tons

3 112

3 112

The average metal content in the geological ore reserves:

 

 

 

- Iron

%

32,7

32,7

 - Manganese

%

9,9

9,9

Losses by the ore mining

%

3,0

3,0

Ore dilution by the mining

%

3,0

3,0

Operational ore reserves

ths. tons

3 112

3 112

The average metal content in the operational ore reserves:

 

 

 

- Iron

%

31,7

31,7

 - Manganese

%

9,6

9,6

Production enterprise capacity for ore mining

ths. tons / year

200

200

Period of provision of operational reserves for enterprise

year

15,6

15,6

Period construction

year

1,5

1,5

Period calculation

year

17

17

Commercial production enterprise in volume terms:

 

 

 

- Bulk iron-manganese concentrate

ths. tons

1 245

1 245

Prices of commercial products:

rub. / t.

6 055

5 584

Cost of commercial production

million rub.

7 537

6 951

Сapital investments

million rub.

1 106

1 106

Operational costs

million rub.

4 424

4 396

Specific production costs per ton of ore

rub. / t.

950

950

Tax revenues

million rub.

1 443

1 303

Net present value (NPV)

million rub.

710

497

Profitability index (PI)

units

1,8

1,6

Capital investments payback period

year

6,9

8,2

Internal rate of return

%

24,1

20,0

Discounted revenue

million rub.

3 596

3 316

State NPV

million rub.

485

472

The fraction of state NPV in the discounted revenue

%

13,5

14,2

The value of differential rent

million rub.

882

616

The value of absolute rent (MET)

million rub.

362

334

The value of mining rent

million rub.

1 244

950

The fraction of mining rent in the recoverable value

%

34,6

28,7

Cadastral value - return of the deposit

million rub.

1 539

1 247

 

Analysis of the impact of changes of the specific operational costs allows for the conclusion that on the Oktyabrskiy deposit the value GNI falls below 10% with an increase of the specific operational costs to 582 rub. / tons and more (up to 1532 rub. / tons and more ). In relative terms, this increase will be more than 61% of the base value of the specific production costs. Adjusted for risk (at a discount rate of 20%), this project will retain its investment appeal only if the specific current costs will be increased by not more than 170 rub. / tons (up to 1120 rub. /tons). In relative terms, this increase of the specific operational costs amount to 17.9% of their base value.

Analysis of the impact of changes of cost of commercial production allows for the conclusion that on the Oktyabrskiy deposit the threshold value of profitability (GNI = 10%) will be achieved with a decrease in price for bulk concentrate to 4483 rub. / tons.  In relative terms, this fall in prices will be 26% of its base estimated value. Adjusted for risk (at a discount rate of 20%) this project will remain an attractive investment only if the prices of commercial products set at not less than 5584 rub. / tons. In relative terms, this fall in prices of the final product amounts to 7.8% of its base value.

 

Explanatory note

The Fund for Regional Development of the Republic of Buryatia is an organization authorized by the Government of the Republic of Buryatia in the field of application of government investment policy seeking to attract investments to the economy of the Republic, create favorable conditions for investors and business, and reduce the administrative barriers.

To create favorable conditions for investors the RB RDF provides support of investment project in the "One window" format, in other words provides for an investor the solution to all issues of cooperation with organizations, authorities and departments ranging from the processing of documents for a land and ending with the issuance of a building permission.