Pavlovskoye Lead-Zinc Project Approved by State Arctic Commission and Granted RUB 7 Bln in Aid

The First Ore Mining Company, JSC (FOMC, part of ARMZ Uranium Holding Co. / Mining Division of Rosatom State Atomic Energy Corporation) is implementing a project for the development of the Pavlovskoye polymetallic deposit on the Novaya Zemlya archipelago. This is the largest deposit in Russia with 47.7 million tons of ore reserves (2,490,000 tons of zinc, 549,000 tons of lead and 1,194,000 tons of silver). The project envisages the construction of the northernmost mining enterprise with the characteristics to allow Pavlovsky Mining and Processing Plant (MPP) to gain the leading positions among the domestic producers.

The total investment will amount to RUB 71 billion, and FOMC will also receive RUB 7 billion as a subsidy granted from the state budget for the construction of infrastructure facilities, such as water supply systems, sewage treatment facilities, a helipad, and roads, whereas the taxes to be paid to the budget is expected to be at least RUB 43 billion for the whole period. At present, the company has completed the exploration, engineering surveying, and designing of the MPP and the seaport.

«We have been granted the largest subsidy amongst all the announced projects, which proves the high status of the Pavlovskoye and its importance for the development of the Russian Arctic and the expansion of the Northern Sea Route. Today, we are entering new, unexplored regions to build a high-tech enterprise with competitive products. The premium quality of the products with a minimum amount of impurities has made it possible to obtain approval for the entire scope,» said Igor Semenov, Executive Director FOMC.

The Pavlovsky Mining and Processing Plant is to produce up to 47,000 tons of lead concentrates and 223,000 tons of zinc concentrates per annum. Interest in buying the products has been expressed by both domestic and major overseas industrial groups. In particular, Rosatom State Atomic Energy Corporation is developing some business lines that will require the bulk output of lead to be produced at the Pavlovsky Mining and Processing Plant.

Cost-effectiveness and operational efficiency will be achieved by a number of factors, including the use of the low-cost open-pit method with a small stripping ratio (shallow horizon), a high content of metals in the ore (5.21% of zinc and 1.15% of lead), and innovative process solutions (e.g., a floating platform based concentrator, digital technology, and robotics).

The project is already being implemented in collaboration with technology partner: Finnish Outotec, which is a leading player in the market of mining process solutions. In 2019, the companies signed a cooperation agreement envisaging that Outotec would develop a comprehensive production technology for high-latitude mining processes. «The Pavlovskoye is a commercial project, therefore, the quality and competitiveness of the products is the key reference points for us. Even at the stage of exploration, we engage the world’s leading experts who will be able to assess the management level and compliance of the processes with the international standards and best practices,» Igor Semenov stressed. In particular, in the field season of 2020, FOMC has conducted exploration at the deposit to estimate the mineral resources and ore reserves in compliance with the international JORC Code. This will help increase the financial attractiveness of the project, raise additional funding and ensure agreements with key partners, while FOMC is currently negotiating with two potential investors.