ENRC buys 90% of Zambia's copper and cobalt producer Chambishi Metals PLC

Almaty, February 18 2010

Interfax-Kazakhstan - Kazakh mining and metals group ENRC acquires a 90% interest in Zambia's largest cobalt producer Chambishi Metals Plc and 100% of Dubai-based marketing and trade company, Comit Resources FZE, for $300 million, the company said.

"The aggregate consideration for the transaction amounts to US$300 million, which will be wholly funded from ENRC's existing cash resources," the company said.

"ENRC currently plans to invest approximately US$80 million into Chambishi by the end of 2011, in new and upgraded production facilities. The investment should increase Chambishi's copper production capacity to 55 kt per annum of London Metal Exchange ('LME') Grade A copper cathode," the company said in a press release.

"The acquisition also enables ENRC to fast-track its copper and cobalt expansion and to achieve a higher planned level of combined total capacity, of 130 kt per annum of LME Grade A copper cathode and 12 kt per annum of cobalt contained metal salts and concentrates by 2012," ENRC said.

"The acquisition of Chambishi provides the Group with a producing, expandable facility to process sulphide concentrate - which will be supplied in increasing quantity as our activities in the DRC mature. To build such a facility would take at least three years and involve an investment in excess of the current purchase price for Chambishi and Comit," according to the statement.

By purchasing Comit, ENRC will get access to established markets and customers for refined copper and cobalt and to the in-depth knowledge of markets for the products of Chambishi.

ENRC pledges to retain Chambishi's strong operational management team.

Current copper production capacity at Chambishi is 25 kt per annum of blister grade copper. Chambishi is also a substantial producer of cobalt, one of the largest in the world, with a current capacity to produce 6 kt per annum of refined cobalt metal. The cobalt metal produced at Chambishi is high-grade and has strong brand recognition in the industry.

Comit acts as a marketing and sales company for all of the copper and cobalt production of Chambishi.

Chambishi's current facilities comprise a roast leach electro-winning plant - for the processing of oxide concentrate, sulphide concentrate or intermediate metal salts - and an electric arc furnace and a pressure oxidation leach plant for furnace slag treatment. Chambishi also owns a slag dump of approximately 16.6 million tonnes, with an average grade of 1.10% copper and 0.71% cobalt.

ENRC was created in late 2006 as a result of reorganization of Eurasian Industrial Association and now also includes the assets of Kazchrome, Aluminum of Kazakhstan, Kazakhstan Electrolysis Plant, Sokolov-Sarbai Mining and Processing Integrated Works, Zhairem Mining and Processing Integrated Works, Eurasian Energy Corporation, ENRC Logistics and ENRC Marketing & Sales. The company has owned a controlling stake in Russia's Serov Ferroalloy Plant and its affiliates since April 2008. It also owns 50% of a joint venture to mine iron ore in Brazil with Bahia Miner and a 50% stake in Xinjiang Tuoli Taihang Ferroalloy Company (China).

In November 2009 ENRC has completed the acquisition of 91.65% of the shares in Britain's Central African Mining & Exploration (CAMEC) for $955 million.