Baikal Mining Company sums up the 2010 results and plans the next stage of the Udokan deposit development

Baikal Mining Company has successfully completed the following works as part of the 2010 programme for the Udokan deposit development:

Exploration and Technological Works
Retrospective sampling data has been verified. In the course of the drilling programme, over 13,000 meters of verification, geological and geotechnical boreholes have been drilled, over 1,200 meters of trenches and over 2,500 meters of underground workings have been sampled. More than 5,000 channel and core samples have been taken for further assays.
These works will increase the level of confidence in Measured, Indicated and Inferred Resources estimated in accordance with the JORC Code. Based on the updated Mineral Resources statement prepared as a result of the 2010 drilling programme, the Ore Reserves for the Udokan Project will be declared in accordance with international standards.
A core storage facility has been constructed at the Udokan deposit.

Completion of Prefeasibility Study for Udokan Deposit Development
Prior to preparing a geological section of the Prefeasibility Study, the required deposit data has been collected, which enabled a 3D geological model to be constructed and a digital database to be developed for specialised modelling (models on the rock carbonate content, hydrological and permafrost data, rock and ore specific gravity, rock and ore drilling capacity, mineralogical types of ore and rock fracturing).
The mining section of the Prefeasibility Study includes an optimised option of the combined mining method which allows to achieve the established production targets. Optimisation of technological processes for the flotation circuit has been completed and innovative processes (hydrometallurgical production of cathode copper and a heap leaching of out-of-balance ore reserves) have been developed.
Based on the works completed, deposit mining methods have been determined, decisions regarding the production complex, infrastructure and construction management have been made and preliminary capital and operating costs have been estimated.

Comparative Analysis of Technological Processes and Validation of Technological Scheme for Designing a Mining and Processing Complex (MPC)
Bateman International Projects B.V. and Xstrata Technologies have jointly performed technical- economic calculations and carried out a comparative analysis of different methods for processing Udokan ores. As a result, it was found that the Bateman’s proposal demonstrates the lowest capital and operating costs, better economic results, and is based on the greatest number of auxiliary studies.

Development of Pilot Processing Testwork Programme
As part of the pilot testwork, sulphide and oxidised copper concentrates have been produced at the Udokan pilot plant. Further tests on concentrates will be undertaken by the SGS Lakefield Research Centre in Perth (Australia).

Development of the MPC External Power Supply Network
To meet the Udokan Project power requirements, the Siberian Energy Technical Research Centre has developed the “Scheme of External Power Supply to the Udokan Mining and Processing Complex”. Calculations have been made based on the existing and predicted power balances of the neighbouring regions. Currently, three power supply sources are under review: Unified Energy System of Siberia, Unified Energy System of the East and construction of the Udokanskaya Thermal Power Station.

Social and Ecological Responsibilities
In accordance with the conditions for subsoil use, the work with the Transbaikal Territory Administration is carried out within the framework of the social and economic cooperation agreement.
In cooperation with SRK Consulting, the work has commenced to assess the impact of the Udokan project on the natural and social environment of the Kalarsky area of the Transbaikal Territory. First public consultations have been held, information materials and the preliminary plan for liaison with the involved parties has been developed and published on Baikal Mining Company’s website.

Comprehensive Reassessment
The company has completed the first stage of fulfilling the subsoil use conditions, having submitted the geological report “Comprehensive Technological and Geological-Economic Reassessment of the Udokan Deposit on the Basis of Innovative Technologies” to Rosgeolfond and the Transbaikal Branch of the Territorial Fund of Geological Information in the Siberian Federal District in December 2010. The document has been prepared with the assistance from the Central Research Geological Exploration Institute and SRK Consulting (Russia) Ltd and submitted to the State Register under No 76-10-82.
The final results have been used as a basis for the technical and economic model of the deposit development. The model is a combination of technical solutions and economic parameters which reflect the efficiency of the decisions taken.

Preparation for Bankable Feasibility Study
As part of preparation for the bankable Feasibility Study, the advance research work programme has commenced. The programme includes the detailed topographic surveying of the deposit area, determination of locations for the future mining and processing complex facilities, review of hydrological, hydrogeological and seismic conditions at the deposit site, as well as the study of logistics arrangements.
The programme of Baikal Mining Company for the implementation of the Udokan copper deposit project for 2011 provides for the following activities:
- draw up a technical project and commence the development of a bankable Feasibility Study;
- continue exploration and technological works with the total drilling volume of over 30,000 meters;
- update the block model of the deposit and the data on Mineral Resources and Ore Reserves in accordance with the JORC Code and obtain the relevant certificate;
- undertake geotechnical drilling at proposed locations of the main infrastructure facilities;
- carry out metallurgical sampling;
- continue the testwork programme to confirm the processes selected for the future MPC;
- finalise the flowsheet for processing Udokan ores;
- assess the project impact on the social and natural environment as required by International Financial Corporation;
- design the industrial and social infrastructure facilities.