August 11, 2008 / 4:15 PM / 11 years ago

Russia's Severstal buys gold mine in Kazakhstan

MOSCOW, Aug 11 (Reuters) - Severstal (CHMF.MM), Russia’s largest steel maker, has bought 100 percent of the Balazhal gold mine in East Kazakhstan, the company said on Monday.

The mine has estimated recoverable reserves of up to 20 metric tonnes of gold, and a resource potential of up to 30-40 tonnes, Severstal Resources, the mining division of Severstal CHMFq.L, said in a statement.

It did not disclose financial details of the purchase made through one of Severstal’s subsidiaries.

“Balazhal is an attractive asset which allows us to quickly restore the existing production facilities,” said Nikolay Zelensky, head of Severstal Resources’ gold business segment.

“Buying this asset is a further step to strengthening Severstal’s gold mining business in Kazakhstan, which we consider to be a strategic region,” he said.

The mine and heap leaching plants, located 260 kilometres south of the city of Semipalatinsk, were built on the deposit in 2004, but mining operations were suspended due to financial difficulties in 2006.

Severstal Resources said it plans to resume production by 2009 and to raise output to 1.5-2 tonnes of gold a year within two to three years and was considering both potential heap leaching and gold concentrate production.

Severstal is majority owned by billionaire Alexei Mordashov. In 2007, Severstal Resources’ gold assets produced 5.3 tonnes of gold, with its resource base totalling around 445 tonnes, including the Balazhal mine. (Reporting by Maria Kiselyova, editing by Will Waterman)

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