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11.09.06

Development of Deposit Goluboye in Krasnoyarsy krai was begun

Leader of refractory industry on Russian and CIS market Magnezit Group JSC began development of magnesite deposit Goluboye in Krasnoyarsky krai (Razdolinsk settlement, Motyginsk district). At the end of August of current year mining works began to strip the reserves. Industrial mining and shipment of raw material is planned for the turn of the year 2006 and beginning of 2007. In 2007 — 2009 Magnezit Group is planning to construct a new industrial complex for raw materials processing. It will be built in the immediate proximity from the deposit. Total investments in this project will exceed 1 billion rubles.

At present prospected resources of Deposit Goluboye amount to 15,5 million tons. As a result of additional prospecting works volume of proved reserves might increase considerably. Planned production capacity of the open -cast mine amounts to 200 thousand tons of raw magnesite per year. By preliminary calculations of Magnezit Group specialists planned production capacity will be achieved by 2008. Deposit Goluboye is conspicuous for the best quality of mineral among all magnesite deposits prospected in CIS. Processing of raw material from this deposit enables to obtain stable quality fused periclase with MgO content of more than 98 %. This index is practically unachievable while using raw material from other CIS deposits and from the majority of Chinese deposits. Industrial processing of the deposit will enable Magnezit Group diminish considerably dependence of the Holding plants upon imports of periclase powders from China. It will be possible to increase quality and consequently competitiveness of the Holding products. It will enable also set going production of new kinds of products in particular granular caustic magnesite.

In 2007 — 2008 a new industrial complex will be built in the immediate proximity from the open-cast mine. It will include a plant for production of calcined magnesite with production capacity of 95 thousand tons per year. 62 thousand tons from this amount will be used for further production of fused materials, 33 thousand tons will be used as final salable product. Furthermore the industrial complex will include plant for coal gasification, warehouse for storage and reloading of the material and a settlement for construction workers and personnel. In the long perspective as the first stage of the production complex will have been reaching the planned production capacity it is planned to construct the second stage — plant for production of fused periclase with the production capacity of 30 thousand tons per year. It is planned also to build a facility for production of materials for construction industry (in particular magnesia cement and products on its basis). A part of raw material mined from the deposit will processed at Razdolinsk periclase works.

Magnezit Group Ltd. is the only company in CIS having access to raw magnesite. Besides Deposit Goluboye the Holding possesses several Satka group of deposits in Chelyabinsk region operated by Kombinat Magnezit JSC. Total volume of proved reserves of this group of deposits surpass 150 million tons. Taken into account Deposit Goluboye one can say that plants belonging to the Group are provided for reserves of natural magnesite for the next 55 — 60 years.

«Our own deposits are the most important competitive advantage of the Group ensuring firm positions of the Holding on the Russian and the world markets, high quality of products and flexible price politics in comparison with competitors, — underlined general Director of Magnezit Group Ltd. Sergei Odegov. — In the nearest perspective we shall carry out systematic development of raw materials base: we shall realize additional prospecting of the deposits, complex program of measures aimed at increasing effectiveness of raw materials utilization, perfection of technology and methods of magnesite mining. Up to the end of 2006 about 300 million rubles will be allocated for development of raw materials base of the Group.»

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