Shares in KAZ Minerals plunged on Thursday after the Kazakh miner said it has to buy the Baimskaya project in the Chukotka region of Russia from a group of investors including Chelsea soccer club owner Roman Abramovich.
KAZ stock dropped 33% on New York over the counter markets affording the company a $3.3 billion valuation. KAZ calls Baimskaya 鈥渙ne of the world鈥檚 most significant undeveloped copper assets鈥� and it would catapult the company into the top ten global producers of the metal.
Baimskaya in the far east of the country holds 9.5 million tonnes of copper and 16.5 million ounces of gold (based on Australia鈥檚 JORC methodology which is similar to Canada鈥檚 NI鈥�43101 guidelines).
The mine is expected to achieve annual output of 250,000 tonnes of copper and 400,000 ounces of gold with commercial production in 2026 at the soonest. Mine life is 25-years.
That鈥檚 on par with the three largest copper projects currently in the works 鈥� Ivanhoe鈥檚 Kamoa-Kakula in the Congo, and the expansion of Codelco鈥檚 Chuquicamata in Chile and Rio Tinto鈥檚 Oyu Tolgoi in Mongolia from open pit to under ground.
What may be scaring investors in KAZ is the projected capital outlay. KAZ estimates capital expenditure to develop the mine of聽 聽$5.5 billion depending on the outcome of a feasibility study.
鈥淭he economics of the project combined with KAZ鈥檚 strong execution credentials are expected to be attractive to a range of finance providers,鈥� the company said in a statement.
In 2017, KAZ鈥檚 total copper production was 259,000 tonnes with by-products of 58,000 tonnes of zinc in concentrate and 179,000 ounces of gold.