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ALROSA receives a grant for the development of the Upper Muna field

  • Published in Economy
Upper Muna 30 03 18

ALROSA received a bank guarantee from VTB for more than 8.5 billion rubles. These funds are the financial security required for ALROSA to receive a grant for the construction of a service lane within the framework of an investment project for the development of the Upper-Muna diamond deposit in Yakutia. The Company will receive the first tranche of the grant of 1.3 billion rubles in the coming days.

Guarantee is issued until the end of 2020, its beneficiary is the Ministry of the Russian Federation for Development of the Far East.

In September 2016, during 2nd Eastern Economic Forum, ALROSA and the Ministry for Economic Development of the Russian Far East signed an Investment Agreement on the project for the development of the Upper-Muna ore field. According to its conditions, ALROSA independently builds an infrastructure facility - a temporary technological road from the town of Udachny to the Upper Muna (Verkhne-Munskoye) field - and compensates for the expense through the grant of more than 8.5 billion rubles. Such a mechanism is stipulated by the rules for granting subsidies approved by the Resolution of the Government of the Russian Federation of July 9, 2015, No. 693.

"Construction of the technological road to the Upper Muna is nearing completion. Earlier this week, we signed an agreement with the Ministry of the Russian Federation for Development of the Far East, according to which, in the coming days, the Company will receive the first tranche of a grant of 1.3 billion rubles. By the end of this year, the Company will be compensated 3.5 billion rubles spent on the construction of the service lane. The remaining 5 billion rubles will be paid within the next two years," said ALROSA Deputy General Director Aleksei Filippovsky. “One of the conditions for receiving a grant is financial support in the form of an independent guarantee issued by the bank. We conducted a tender, which resulted in choosing VTB with the most favorable terms for us."

Head of the Transactional Business Department - senior vice-president of VTB Bank Gurinder Nikhal said:

"We have been successfully cooperating with ALROSA since 1992 and provide a wide range of transactional products and services, including settlement services and documentary products. Also, with the participation of the bank, the company implements treasury control over the cash flows of subsidiaries using the Client's Financial Settlement Center."

Reference:

The development of the Upper Muna (Verkhne-Munskoye) deposit is the largest investment project of ALROSA. The deposit is located 170 kilometers from the Udachny Mining and Processing Plant. At the moment, 4 kimberlite pipes have been explored: Zapolyarnaya, Deimos, Novinka, Komsomolskaya-Magnitnaya. Their total reserves are 64.8 million tons of ore with an average content of about 0.6 carats per ton - a total of 38.4 million carats. The development of the field is planned until 2041. The launch of the field for commercial operation is planned for 2018. After reaching the designed capacity in 2019, the enterprise will produce 3 million tons of ore per year. The project provides for the creation of more than 700 new jobs in the Republic of Sakha (Yakutia).