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VTB to loan Armenia ACP $249.5 mln for development of Tekhut copper

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  • VTB to loan Armenia ACP $249.5 mln for development of Tekhut copper

    Interfax News Agency, Russia
    May 27 2008



    VTB to loan Armenia's ACP $249.5 mln for development of Tekhut copper
    field

    YEREVAN May 27


    Russia's VTB Bank (RTS: VTBR) will issue a $249.5-million loan to
    Armenian Copper Programme (ACP) for the development of the Tekhut
    copper and molybdenum field in northern Armenia, VTB President and
    Chairman Andrei Kostin said at a press conference in Yerevan on
    Tuesday.

    The loan agreement was signed by Kostin and ACP President Valery
    Mejlumian, who is also the president of CJSC Tekhut, which was set up
    for the realization of the project.

    A memorandum on a $257-million loan for the project was signed in
    Yerevan in November 2007, Kostin said. "VTB opened a credit facility
    of $30 million for ACP via its subsidiary in France last year for the
    start of the project and so that work did not stop," he said.

    The loan is being issued for 12 years. VTB will be represented in the
    project's management so that it can control cash flows. "The bank is
    counting on participation in profit by receiving a certain stake in
    the project's stock, which will then be bought back by the main
    shareholder," Kostin said.

    In addition, VTB has provided a $78-million loan for the development
    of the Agarak Copper and Molybdenum Plant in southern Armenia, he
    said.

    The GeoProMining group, a company with nonferrous metal mining and
    processing assets in Georgia, Armenia and Russia that is part of
    Russia's Industrial Investors group, is the sole owner of Agarak
    Copper and Molybdenum Plant. The plant increased production 8% to $49
    million in 2007.

    The Liechtenstein-registered Vallex F.M. Establishment owns 81% of
    ACP, while Russia-based businessman Valery Mejlumian owns 19%.

    Preliminary estimates put ore reserves at 450 million tonnes,
    containing 1.6 million tonnes of copper and 99,000 tonnes of
    molybdenum.

    The company plans to annually mine 25,000-30,000 tonnes of copper and
    800 tonnes of molybdenum, which will account for 40%-50% of the
    country's copper production and up to 20% of its molybdenum output.

    VTB Bank was Russia's second largest bank by assets in the first
    quarter of 2008, according to the Interfax-100 ranking of the
    country's biggest lending institutions, compiled by the Interfax
    Center for Economic Analysis.
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