Almazintech on the market of mining projects services

Reference

The OOO Almazintech - Consulting and Engineering Company was founded in 2002. The GRACE group of companies was one of the founders of the Company. In the past seven years, the Company that started practically from the scratch has acquired good reputation on the market of the engineering services in the field of solid minerals mining projects. In 2005, Almazintech established a subsidiary, called OOO Almaztechproject, having thus completed the setting up of an entire range of mining projects services from geological exploration and design engineering to operator's monitoring and accompaniment of implemented projects. These two teams comprised over 200 skilled staff with rich experience of practical work in geological and mining companies. Almazintech is a subsidiary of the National Geology Development Foundation (central office in St. Petersburg), takes part in the implementation of mining projects under the action program of the intergovernmental commission “Government of the city of Moscow – Government of the Kyrgyz Republic.”

Our reporter interviewed managers and main specialists of Almazintech and Almaztechproject. Here is what they said answering his questions.

V.N. Kondratiev, Director General of OOO Almazintech.
Q. Mr. Kondratiev, you have been heading the Company since it was established. The Company will soon mark its seventh anniversary. What services is Almazintech offering on the market?
A. There are four key business lines:
Firstly, it is consulting in the field mining projects: we conduct technical and technological expert appraisals, carry out technical and economic calculations and integrated audit of mining companies.

Almazintech is a permanent consultant on technical issues of the public Swedish gold mining company Central Asia Gold AB, the diamond mining company OAO Severalmaz, and some other companies.
Here are several examples of activities implemented by our staff in the last two years:
Geological expert assessment of gold, coal, and polymetallic projects of Nafta-Metall (Russia);
Integrated expert evaluation of gold mining assets of Zolotaya Zvezda (Russia);
Technical and economic project development efficiency assessment of the gold fields Trevozhnoe Zarevo for the company Trans-Saberian Gold Pls (Russia);
Expert assessment of the Luia diamond project and Telelo-Mavoio copper project in Angola;
Integrated expert assessment of the Cacoala diamond project in Angola;
Expert assessment of the Nalunak gold project in Greenland (Denemark);
Technical and economic feasibility evaluation of gold mining projects Chertovo Koryto (Polius-Zoloto Company) and Taseevskoye (Rusdragmet), Russia.
Secondly, we are operators of mining projects.
On clients' requests, Almazintech recruits managers and engineers for mining projects. We also do contract geological surveys and develop and prepare gold and diamond fields for commercial mining. Here are some examples:
Registration of the Vasin gold ore deposit with the state reserves committee for the Orenburg Mining Company (Russia).
Supplementary geological survey of the Larjo gold deposit (Liberia).
Geological studies of the Karalon gold ore deposit, OOO RudKaralon (Russia).

The third line of our activity is attracting investments for mining projects.
In recent years, Almazintech has found investors for nine gold ore mining projects. The most recent transaction was the sale of 100 percent of the OOO RudKaralon, in the Republic of Buryatia.
As to this sphere of business, Almazintech acts as a professional intermediary between the owner (mineral developer) and the potential investors. Our specialists prepare information memoranda with a detailed analysis of the geological, mining and economic parameters of the respective projects. This enables our partners to select the most interesting projects and most promising prospects or existing producing assets. At investors' request, Almazintech assesses primary documents that serve as a basis for the information memoranda.
It is important to note that Almazintech is contracted on the terms and conditions of the mining projects owners and does not demand an exclusive right of selling the assets.

The fourth line comprises technical-scientific and development activity.
Jointly with its partners, Almazintech develops and commercializes new Russian technologies, mainly in the mining sector. We received five patents in the past years. Among our staff, we have three Candidates of Science in Engineering and one honored geologist of the Russian Federation. Three more our colleagues are working on their candidates' papers.
We are monitoring projects in the fields of metallurgy and mooning technologies. Just a few words about three such projects.
1. This year saw the successful completion of the design work for the creation of an automated pilot plant for finishing diamond concentrate. We did it under a contract with OAO ALROSA-Nyurba. Soon, the industrial sample will be manufactured.
2. In 2008, Almazintech jointly with OOO Atom-Innovation (Rosatom State Committee) established a joint company - Engineering Testing Center (NPP GeoTestService). The Testing Center key activity is the implementation of innovation technologies of separating lump ore at the existing plants processing primary ores and factory-generated material. The equipment basically comprises sorting machines supplied by our German partner CommoDas, world leader in sorting machines. These sorters can be used for all types of solid minerals, both metallic and nonmetallic.
3. At this stage, kimberlite mining, until now done in open pit, goes underground. This is a feature that marks the diamond mining business both in Russia and abroad. The innovation underground kimberlite mining technology worked out by Almazintech specialists dispenses with cement-based mixes for filling in the mined-out spaces, outreaching the known technologies for its economic and technological parameters.

Q. Mr. Kondratiev, you have presented a good deal of work done but what do you think about the prospects of your Company for 2009 and how the recent problems in the financial sphere will affect your activities?

A. In planning the activities for the coming year, I discussed the situation in our mining sector projects with our partners. In our opinion, the investors for whom the mining sector is not a core activity will abandon this business for at least the years immediately ahead. In fact, these players did not contribute to the projects’ development - they did not finance geological exploration, did not invest in the fixed capital and the operations. What they did was to wrap up the projects in beautiful wrappings to attract funds from the equities market. Such projects were doomed.
Almazintech staff has been always aiming to the full-value development of mining projects including the final production stage. We have the extensive background of starting-up and commissioning projects in Yakutia and Africa.  This is why I think that the current crisis will be to a certain degree useful for our sector of business: there will be less virtual mining projects and more real projects. The professional approach will prevail. This also means that the services provided by such companies as ours will be even more demanded by serious clients.

Q. What advantages your Holding offers can be of interest to the potential investors?
A. Almazintech and Almaztechproject are operating in all phases and areas of mining projects: geological exploration, research engineering, technical and economic study of deposit development conditions, reserves substantiation, feasibility study, and the design engineering of the deposit development and exploitation. In addition, our company is the part of the group of companies GRACE with its unique 10-year production, wholesale trade in polished diamonds and retail trade in jewelry experience. Such integrated service is sought by clients. We are a private company and are not owned by any big financial or financial and industrial grouping. This enables us to have a niche of our own on the mining sector services market.
Our team is confident of the future.

Yu.G. Zhelyabovski, Deputy General Director, Mining, Cand.Sci. (Tech.)

Q. Mr. Zhelyabovski, your area is mining. What are your tasks and achievements?

A. There are several areas of activity at our enterprise:
1. Expert assessment of mining development projects in accordance with the requirements of the State Reserves Committee of the Russian Federation.
2. Technical and technological analysis of operating companies.
3. Pre-feasibility study of deposits for possible methods of exploitation.
4. Scientific and inventive work aiming to optimize open-pit and underground mines.
The last point deserves special attention. Good results have been achieved in this area. Our patented innovation developments and know-how make allow increasing significantly the technical and economic indicators of mining operations. For instance, the system of underground mining with loose filling can change kimberlite mining technology. It allows to totally dispense with the use of cement in the filling mix, achieve a high mechanization index, dispose of the nonproductive part of ore leaving it underground, not taking it out of the mine. The problem is that the production managers are not willing to bother with the implementation of this innovation. This problem can be resolved with the participation of the state as the single owner of subsoil - it could create incentives and enact regulations that could contribute to resolve of this issue. We believe that apart from ALROSA there will be new subsoil users and a competitive environment will emerge compelling companies to update mining technology.

V.K. Godun, Deputy Director General, Metallurgy

Q. Konstantin Viktorovich, Almazintech is engaged in development and implementation of new innovative technologies in geology and mining. What are the most interesting works in the area of ore processing?

A. Almazintech - Consulting and Engineering has a team of skilled engineers, both in-house staff and working under a contract.  It is a highly qualified and creative group of specialists, close associates weld together by the common background of work in the North and in Africa.
In recent years, Almazintech has developed an invention patented under the name "The method of separation of diamond containing materials" based on a big number of experimental findings. Currently, the work is underway to compile the program of the implementation of this invention.
We have carried out and patented another invention, “The method of identification of diamond crystals", and currently are looking for an investor to implement it. As we proved it in experiments, any crystal can identified using this method based on the individual unique spectral-kinetic parameters inherent in any raw and, consequently, polished diamond. These parameters, in particular, the spectrum band of the optically active luminescence centers, make it possible to know the exact origin of any diamond, both raw and polished (deposit, processing, cutting and faceting plants, etc.), and whether a particular cut and polished diamond corresponds to some particular raw stone.

This year, Almazintech has tested a new technology and the automated pilot machine for chemical processing of diamonds at one of the ALROSA factories. The results were used to formulate the technical design specification to manufacture these machines.
Since 2006, Almazintech has been monitoring the operations of the processing facility of the Severalmaz mining company. We carry out scientific research, give technological consultations, and jointly with the staff of the processing plant develop new and check new technological solutions to improve the diamond ore processing technology.
This year, Almazintech jointly with one of the divisions of the ROSATOM State Committee, namely, Atom-Innovation Center, and the German company CommoDaS GMB established a testing center to carry out amenability tests on different kinds of ores using new sorting machines. New innovation technologies will be developed on the basis of these amenability tests. The new technologies and equipment will allow to work with material that otherwise would have been considered waste material and with currently uneconomic ores with low grades of the useful component.

F.S. Ivanushkin, Deputy General Director, Geology.
Q. Mr. Ivanushkin, what are most important projects Almazintech geologists participated in?

Almazintech geological division conducts four main lines of activities:

1. Search for promising geological areas and objects with solid ore and non-ore minerals by the potential investors’ requests.
2. Expert assessment of primary geological materials collected as a result of previously conducted geological studies on geological areas and objects.
3. Recruitment (functional specialists) for particular kinds of activities, and operator's functions at the work site.
4. Assessment of the feasibility of investments in the development (expansion) of the output of mining companies.
 These activities are conducted both in Russia and in the CIS and far-abroad countries, including other continents.
In 2007-08, the most important projects the Almazintech team participated in were the following:
1. Integrated expert assessment of the Cacuala diamond project in Angola. Our specialists analyzed the results of the geological prospecting, exploration and studies carried out at that project during 3 years, assessed the efficiency of the methods used in that work, the composition of the equipment used for geological studies and industrial-scale processing. This appraisal resulted in a report with all necessary conclusions and recommendations about the subsequent development of the project.
2. Supplementary geological studies of the Larjo gold deposit in Liberia.
Almazintech geologists' work at that project was targeted on the confirmation of the results of the previous geological studies. A wide range of prospecting, exploration and evaluation activities was carried out including magnetic surveys, trenching, sampling, and preliminary study of the samples taken. The reserves of the deposit were assessed and the economics of the project analyzed. Recommendations were made as to the further geological studies of the licensed area.
3. We conducted an integrated assessment of several gold projects by the request of the Swedish company Central Asia Gold, and prepared Information Memoranda on all gold ore deposits and placers of this company in the Tyva Republic, Irkutsk Region and Krasnoyarsk Territory aiming to attract potential investors for the development of these deposits.
4. Geological assessment of gold, coal and polymetallic projects of NaftaMetall company in Karelia (several deposits in the Kamennozerskoe area), the Irkutsk region (Kartagon coal deposit), Karelia (Loban molybdenum deposit), the Rostov region (Kerchik gold deposit, Southern Donbass coal deposit), the Novosibirsk region (Lapinskoe coal deposit).
5. Integrated assessment of gold ore projects owned by ZAO Zolotaya Zvesda company (the Republic of Khakassia).
 The foreign projects take special place in Almazintech’s activity, first of all, those in Angola. The majority of our staff worked for many years at the projects of Catoca, Camachia-Camajica and others and gained a vast experience of implementation of mining project in tropical climate and difficult economic and political conditions. We have accumulated a big data bank on the technological parameters of mining and processing equipment to be used in kimberlite mining, which is quite specific as compared to what we have in Russia. This information can be used in design engineering and construction of mining and processing facilities in any country. In recent years, the Angolan state diamond company Endiama offers licenses for diamond mining in Angola areas where little or no geological prospecting was done and no known kimberlites or placer deposits proper for economic production exist. In such cases, the investors have to invest in geological studies of the territory with no guarantee whatsoever that a commercial deposit will be discovered.
 Almazintech has a considerable archive of geological materials on diamond-bearing characteristics, and developed the methods of preliminary assessment of the diamond potential of an area, both for kimberlites and placers.

These methods are based on the integrated analysis of the available geological, structural and geological, and geomorphological information about the areas of interest, which territory is studied by available high quality pictures and the activities of the local gold and diamond diggers. For instance, by request of the Russian Diamond Group we analyzed 16 areas offered for licensing having chosen three most promising ones. The Group financed the studies of one such area, Mualengue. The first phase of the geological studies of the area resulted in strong indications to the existence of several kimberlite bodies in the area; the work is going on. Similar activities were carried out in other areas, for instance, in Luia, Xingufo, Chegi, and Cacoala.
 Similar studies were performed by the request of the ESN Group in the territory of the West-African Craton within the boundaries of Guinea and Sierra Leone. In spite of the aggressive publicity campaign about the investment opportunities in that area, our specialists did not recommend to make investments there due to the low possibility of finding commercial deposits. The same type of studies were conducted in some areas in Venezuela and Guyana, in Latin America, where we gave a positive assessment of the investment potential.
Besides, different types of studies of geological and other technical materials were performed on other projects in Russia and abroad: in Tanzania, Guinea, Burma, Guyana, in the Arkhangels region, in Buryatia and Yakutia.

V.V. Kudrya, General Director of OOO Almaztechproject

Q. Mr. Kudrya, when was Almaztechproject established, and what is the scope of activities your company is engaged in?
A.  Almaztechproject was established in 2005 to carry out design engineering at different phases of subsoil development. Since then, we performed a number of engineering and scientific research projects in different zones of Russia. In our activities, we use the most up-to-date engineering methods on the basis of the Macromine software.
Q. What are the goals you set before your team for the years to come?
A. The Almaztechproject staff has a wide range of specialists that have the background of work in the leading national design and scientific centers.  We continuously cooperate  with the governmental bodies regulating the use of subsoil and mineral resources. In executing the current design and engineering orders, our company participates in the process of shaping the strategy of the development of the country’s mineral resources.
The level of the engineering decisions must ensure the sustainable development of our company in the present market environment. I would like to point out that the sustainability and the adaptability of a company’s economic structure to the changing environment should be defined at the initial stages of designing including a qualified expert assessment ensuring high quality of the work to be done. We see our company's development strategy in enhancing our design and engineering activities and taking an active part in the establishment and institutionalizing of efficient expert assessment procedures which alongside their basic functions would play the role of an institution for the improvement of the legislative and scientific and methodological base of the subsoil and mineral resources use.

Q. What projects you can point out as the most significant for Almaztechproject?
A.  Our specialists helped to enter the reserves of the Morgogor diamond deposit in the books of Almazy Anabara, the reserves of the Garbuzovskoe deposit for the Seligdar mining partnership, the reserves of the Chertovo Koryto deposit for the Polius Zoloto company, and we are currently working on the reserves of the Taseevskoe deposit for the Rusdragmet company.

We would like to wish the companies Almazintech and Almaztechproject prosperity and stability in the current not so simple situation in Russia and globally.