Further to its announcement on 20 November 2013 EVRAZ plc (LSE: EVR) announces signing of an agreement with LLC Ruda Khakasii on the acquisition by LLC Ruda Khakasii of a number of Evrazruda’s iron ore assets and utilities companies located in the Republic of Khakassia and Kemerovo region, Russia, for total cash consideration of RUB 10 million (approximately US$306,000).
The assets include the following iron ore mining and processing facilities and energy generating units:
- Abakan iron ore mine, Khakassia;
- Teya iron ore mine, Khakassia;
- Mundybash beneficiation plant, Kemerovo region;
- Abaza-Energo, Khakassia;
- Teyskie Energoseti, Khakassia.
According to the management accounts, as at 30 June 2013, their total gross assets were US$9 million. For the year ended 31 December 2012, these assets produced a total loss before tax of US$20 million.
The parties have also signed a 10-year agreement on supply of not less than 150,000 tonnes of iron ore concentrate per month from the Mundybash beneficiation plant to EVRAZ ZSMK steel mill, as well as short-term agreements on purchase by Evrazruda of primary iron ore concentrate produced by the Abakan and Teya mines to ensure continuity of supply during the transition period. The agreements are signed on market terms.
The transaction is in line with the EVRAZ strategy to optimise its iron ore asset portfolio, and is targeted both at reducing operating losses and at improving Evrazruda’s financial performance.