Copper-focused Kaz Minerals says its $150-million capital expenditure (capex) guidance for 2020 remains in place, as previously curtailed activity will resume in due course.
Prior to the Covid-19 disruption, equipment and materials were delivered to the site for the pioneer works scheduled to take place during the year at the miner’s Baimskaya project, in Kazakhstan.
Progress on the bankable feasibility study (BFS) has also been impacted by the pandemic, with the Moscow and Vancouver teams required to work from home, and domestic and international travel restricted.
However, the Kaz group and the Russian government are continuing to work together on the details of the power and transport infrastructure required for the operational phase of the project including potential take-or-pay agreements.
Owing to the additional time required to finalise the infrastructure plan for the project, including Covid-19 related delays, the BFS is now expected to be completed by the end of 2020.
Based on the results of ongoing drilling campaigns and work completed on the BFS to date, some of the key parameters of the Baimskaya project have changed since those announced at the time of acquisition, such as that the drilling results now indicate a potential increase in mineral resources, which would lead to a mine life extension, previously guided at about 25 years.
Further, the drilling results now reflect the expectation of increased mineral resources and the latest available technology from equipment suppliers. Project economics are optimised by increasing design capacity for the concentrator from 60-million tonnes a year to 70-million tonnes a year of ore processed.
The current construction plan for the processing plant will ramp up the two lines in consecutive phases between 12 to 18 months apart, reducing the peak funding requirement when compared to a simultaneous startup; and the estimated capital budget for the Baimskaya project has increased to about $7-billion following more detailed costings during the BFS work and owing to the additional plant and equipment required to deliver increased ore volumes for the new concentrator design, including a larger mining fleet, maintenance facilities and site accommodation.
About 10% of the capital budget is expected to be incurred after production starts from the first line.
The timetable for construction remains around seven years.
Further details on the project timetable, capex, production guidance and operating costs will be published upon completion of the BFS. Discussions will then be further progressed with potential lenders and the Group will also assess opportunities for partnering on the project.
According to chairperson Oleg Novachuk, Kaz is working to develop its execution strategy for the delivery of the Baimskaya copper project.
Study work and drilling completed so far at Baimskaya indicates that a larger project will unlock the potential of the world class Peschanka deposit, Novachuk said.