"Agarak Copper-Molybdenum Combine" CJSC Demonstrates Sustainable Dev

"AGARAK COPPER-MOLYBDENUM COMBINE" CJSC DEMONSTRATES SUSTAINABLE DEVELOPMENT

ArmInfo
2010-02-11 13:06:00

ArmInfo Agency interview with ACMC General Director Sergej Petrovich
Polovinkin

GeoProMining Group acquired Agarak Copper-Molybdenum Combine shares
in December of 2007. The Company was practically in idle condition
because of the economic crisis. Negotiations with the Government
and realization of anti-crisis program contributed to resuming of
industrial activities of the Company in the second half of the year
2009. Regardless of world crisis, the Company demonstrated a stable
production boost, as well as carried out all social responsibilities.

Sergej Petrovich, we have information that in November of 2009
Technical Economic assessment will be ready for reconstruction of
"Agarak Copper-Molybdenum Combine" CJSC, which was commissioned to
an international company Mechanobr. Is the project ready and what
does reconstruction include?

Technical Economic Assessment was ready on time – at the beginning
of November. The document contains preliminary data on reconstruction
and includes approximate sum, dates, design, equipment models.

Technical-Economic Assessment represents the plan of reconstruction
project and in order to announce more accurate volumes of investments
and terms, we must have the project itself. According to initial
prognosis we will need a year, but later we may reconsider it. I
should mention that reconstruction plan is imminent. Another 20 year
of operation will lead to a collapse of the construction structures
and production equipments, which are old physically and morally. No
reconstruction works have been carried out at the plant from the
moment of its establishment, and it is a very big period.

In the result of reconstruction we plan to increase ore processing
capacities and precentage of metal extraction. Processing capacities
nowadays form approximately 3 million ton ore annually, it is planned
to increase up to 3,5 million ton. As to extraction, it will not
exceed 2-3%, nevertheless it will allow for increase of incomes,
and from the other side it will reduce production self-cost. For
now I cannot tell how much the costs will reduce on this or that
production components – electric power, flotation reagents, etc,
but unambiguously, economic effect will take place.

How much copper concentrate was produced in 2009 and how much copper
and molybdenum was received, what is the dynamics as compared to 2008.

In 2009 a positive dynamics was recorded, although it should
be mentioned that because of global economic crisis the company
started its full-scale operation since July 2009, and during the first
half-year it was practically in idle condition. During the second half
year of 2009 the company processed more than 1,3 million ton ore,
in the result of which we received around 248 ton molybdenum and 13
500 ton copper concentrate, which is more for 5% than in 2008.

Will new work-places be created in the result of reconstruction and
will there take place salary raise?

Presently salaries at our Company are quite high. What about new
work-places, then related to reconstruction works, work-places may
indirectly be created. Renovation-construction works will lead to
inclusion of additional employees. Today the Company employs around
900 people, whereas according to project capacity 750 employees
would be the correct number. In general, social projects are one of
priorities of our Company. Our main problem is to provide people
with worthy jobs and salaries. Social issues are one of the most
important problems for the management. Salaries are regularly paid
and all social responsibilities are being carried out. Since the
end of 2008 ACMC’s operation became instable and starting from
the month of October it started to accumulate losses, which were
covered at the expense of investments of the shareholders. From
the moment of stoppage of the Company 500 employees out of 900
continued renovation-recovery works and received full salaries,
and 400 employees were on downtime vacation, and received 2/3 of
their salaries. After the Company restarted it operation all the
employees were reinstated. City-formation policy is one of the
Companys priorities. It is actively cooperates with the Agarak city
administration, and to the extent of its abilities participates in
realization of social projects.

Last year the RA Government granted ACMC with 14 million USD loan,
how is this loan being realized, when are you going to fully use it?

The Government loan was granted to ACMC for investment project, which
includes procurement of machinery and reconstruction of the plant.

Part of the loan amounts was used for purchase of mining machinery,
which have already been delivered and set in operation. Other part
of the loan amount was used for purchasing of flotation equipment,
delivered at the beginning of this year. We have used 90 % of the
Government loan. The remaining one million will be used for project
design. Business plan obligations, assumed under loan are fully
implemented. Since December 1 2009 the Company started payment of
interests.

What about financial means generally, we will invest in plant
reconstruction more, than the Government loan. Continuously those
investments will make about 20 million USD. Possibly, we will take a
loan, although we would prefer to do by our resources. I would like to
emphasize that these are approximate assessments, everything depends
on the final project and prognosis of global prices for metalls.

What are the Company plans for 2010?

In 2010 we are planning to increase ore mining and processing volumes
up to 3 million ton, and stripping works – up to 2.2 million cubic
meters. As compared to the second six-months of 2009 increase of
production of concentrate can be not so big. One of the reasons is
that for many years stripping program has not been realized, and now
we must reach up to high grade and stable ore. Besides, we will build
up a balancing storage of ore, which formerly didn’t exist. There are
a number of other production problems, which have been waiting for
decisions. Particularly, some structural changes are planned, we should
choose a group of constructors, who will carry out reconstruction
works, also include estimators, engineers-designers. In 2010 favorable
conditions may be created for our Company because of increase of
global prices for copper and molybdenum, which will increase the
income of the company, as well as its attractiveness for investments.

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