Abramovich, BHP in Gold Deposit Talks

The Millhouse investment company owned by Russian billionaire Roman Abramovich is in talks with Australia’s BHP Billiton mining giant to develop the gold-rich Baimskaya area in Russia’s Far East, Kommersant business daily reported on Thursday quoting sources familiar with the matter.

BHP may hold a 75 percent stake in a future joint venture to develop the deposit, located in the Chukotka autonomous region, while Millhouse, which owns the right to the area, may get a 25 percent stake. The deal, from which Millhouse could get $1 billion, may be closed this year, the sources told Kommersant.

The estimated reserves of the promising Peschanka deposit in the Baimskaya area total 27 million tons of copper and 1,600 tons (57 million ounces) of gold.

The two companies might face problems with infrastructure and energy supply in the region, analysts told the paper, as the only nuclear power station in the area would not be able to deliver the necessary amount of electricity to the mining companies.

Societe Generale analyst Sergei Donskoi thinks the two companies could start production at the deposit only after five years of building the necessary facilities.

Millhouse and BHP Billiton declined to comment to Kommersant.


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