If you're looking for platinum, Christian Schaffalitzky believes Russia is the place to find it. The managing director of Eurasia Mining Plc carries with him the financial clout of the world's top platinum miner in his search for the metal used in jewellery and car exhausts.
Anglo Platinum Ltd will spend $3 million this year as part of a $10 million budget to explore three licences with Eurasia in north-west Russia and has a share in an alluvial project in the Ural mountains that could start output next year.
"Russia is probably the most exciting area on the planet for doing exploration," Schaffalitzky told Reuters in an interview. "The downside is that there isn't the legislative structure to allow it to happen very easily," he said. "But the system has matured and has become more manageable."
Eurasia, listed on London's Alternative Investment Market, says drilling on the Kola peninsula has revealed platinum grades in excess of 1 gramme per tonne. Its licences in the region have the potential to be developed into open-pit mines.
"We would hope to have defined a preliminary resource in one of our three licence areas by the end of this year," said Schaffalitzky, who has worked in mining for over 30 years.
"We applied for the areas because they all had sniffs of some kind - results with at least a gramme per tonne platinum metal on its own," the Irishman said. "There are a lot of projects in the world which are rich in palladium as well. But the price of palladium is a quarter of the price of platinum, so we'd prefer to see the platinum." Platinum was trading on Friday at $1,315 an ounce and palladium at $360 an ounce.
Anglo Platinum's $10 million exploration spend - which Schaffalitzky estimates will be completed by mid-2009 - will earn it a 40 percent interest in the three Kola licences.
It spent $2 million last year and has an option to take its interest to 60 percent for a further $6 million. Eurasia's first production, however, is likely to come from the West Kytlim alluvial deposit. The company says about 120,000 ounces of platinum was produced from alluvial mining in Russia last year. Drill results released last week indicate platinum grades as high as 335 milligrammes per cubic metre at West Kytlim.
"Our intention is to move as quickly as possible after we get the permits," he said. "At worst, we'll be in production next year." Eurasia and Anglo Platinum are 50-50 joint venture partners in Urals Alluvial Platinum Ltd, which owns 75 percent of West Kytlim. Local partner Production Artel Yuzhno-Zaozersky Priisk owns 25 percent.
Schaffalitzky said the project would be funded by bank loans during the mining season and that it would use equipment belonging to its local partner. "We will be building it incrementally. Alluvial mining is not the kind of project where you need to throw $30 million to start work. You can start work with relatively small-scale equipment and build it up on that basis. He said the concentrate, containing 70-80 percent platinum, could be sold to any of three refineries in Russia. "If you've got the right amount of platinum, it more than pays and you make a profit for washing the gravel."
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