K & S 2008 Progress
Exploration
Drilling
Geological exploration works were completed at Kimkanskoye (‘Kimkan') and continued at Sutarskoye (‘Sutara') with five exploration borehole drills being used overall. By the end of December 2008, c.21,000 linear metres of drilling and 47,000m³ of trenches were completed.
Hydrogeology
During 2008, six hydrogeological boreholes were drilled, lined and capped ready for pumping. In May 2008, GKZ confirmed water pumping potential of 5,000m³ per day following extensive test pumping of underground aquifers and water analysis.
Geotechnical
Geotechnical exploration for the accommodation camp and the process plant sites and in the area of the tailings management facility was completed in the first quarter of 2008, and tree clearance commenced in the areas approved by the Federal authorities. At the Kimkan deposit, a local construction company tested the overburden stripping material to determine whether it can be used for construction purposes with results due shortly.
Reserves and Resources
In September 2008, Aricom completed the conversion of K&S reserve and resource calculations from the Russian GKZ classification to the internationally accepted JORC classification.
Procurement and Construction
Aricom held discussions with a number of local and international companies regarding the construction contracts for processing and infrastructure. Negotiations focused on local contractors for the smaller, more numerous, infrastructure contracts (roads, rail connections, power and water supplies) and international contractors for the larger contract for constructing the mine and process plants. The contract negotiations for the processing plant culminated in October 2008 with Aricom entering into a non-binding Memorandum of Understanding with China Metallurgical Group Corporation (‘MCC'). MCC are one of the largest equipment manufacturers in China and a leading Chinese contractor to the metals and mining industry. The MoU provides the basis for discussions between Aricom and MCC concerning the signing of an engineering, procurement and construction agreement based on an internationally recognised form of contract (such as the International Federation of Consulting Engineers) for fixed price, EPC/turnkey projects.
Negotiations with equipment manufacturers to supply both the K&S and Garinskoye projects with crushers, screens, ball mills, magnetic separators and specialised vehicles, took place during the second half of the year.
By the end of December 2008, construction work had commenced on access roads and site clearing for a temporary construction camp.
Social and Environmental
Public Consultation
Two public consultations on the project were organised in May and June 2008 in conjunction with the EAO government and the local district administration. A preliminary consultation gathered approximately 70 local citizens, potential employees, and representatives of the authorities, whilst the main public hearing attracted 155 participants. The issues discussed at both meetings included the social and environmental impacts of the project, regional infrastructure development, and employment opportunities. Participants unanimously supported the project.
Human Resources
At the end of December 2008, 118 people were employed in the regional office in Birobidjan and at the K&S project site.
