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Severstal Subsidiary Signs Mineral Development Agreement

09/16/2010 - OAO Severstal announced that its 61.5% subsidiary recently entered into an agreement with the Government of Liberia to develop the Putu iron ore project. The Mineral Development Agreement was signed on Sept. 3, approved by the President of Liberia, and ratified by the Liberian Legislature on Sept. 9.

OAO Severstal announced that its 61.5% subsidiary recently entered into an agreement with the Government of Liberia to develop the Putu iron ore project. The Mineral Development Agreement (MDA) was signed on September 3, 2010, approved by the President of Liberia, and ratified by the Liberian Legislature on Sept. 9.
 
Exploration completed at the Putu project indicates a mineral resource of 1.08 billion tonnes of iron mineralization at an average grade of just under 40%. The project is situated on a 13-km-long ridge, located 120 km inland from the deepwater shoreline of southeastern Liberia. Exploration works are continuing; the deposit has the potential to contain significant additional resources, Severstal says.
 
A pre-feasibility study on the project should be completed by September 2012. Since 2008, Severstal has held a 61.5% interest in the project following the investment of $30 million into the pre-feasibility study. African Aura, an exploration and development company, holds a 38.5% interest in the Putu project. Severstal also holds a 3.56% interest in African Aura.
 
The MDA fixes inter alia the fiscal and commercial regime for the development and mining of the Putu iron ore project. The MDA term is for a period of 25 years, which can be extended further in line with the life of mine. It also sets out the main principles of corporate and social responsibility with total social contributions of $15.75 million for 2010−2017 and thereafter $3 million per year or 0.5% of the prior year’s taxable income.