Eurasia Mining Plc (“Eurasia” or the “Company”), the palladium, platinum, rhodium, iridium and gold producing company, is pleased to announce that the Company’s Kola subsidiary has signed a legally binding cooperation agreement (“ERDC Agreement”) with the Russian state owned Far East and Arctic Region Development Corporation (“ERDC”) which falls under the remit of the Russian Ministry for the Development of the Far East and Arctic.
Establishing cooperation with ERDC with regard to all Eurasia’s projects in the Kola Peninsula (“Kola”) will allow Eurasia (whilst current majority owner of its Kola subsidiaries) to obtain further state support and various tax and non-tax benefits for both Eurasia’s own projects and all the projects included in the agreement between the Company and Rosgeo (collectively “Kola Projects”).
Due to their location in the Arctic Zone of the Russian Federation, the Kola Projects have been included in and will be significantly enhanced by the ERDC Agreement.
Impact of the ERDC Agreement on the Company
In accordance with the Russian Federal Law No. 193 of 13 July 2020 “On State Support of Business in the Arctic Zone of the Russian Federation” (“Law 193”), Kola being a part of the Murmansk Region, was included in the Arctic Zone of the Russian Federation (“Arctic”). Investor support in the Arctic is granted and managed through ERDC and the management company “The Capital of Arctic LLC”, a joint venture of the Government of the Murmansk Region and ERDC that has the state mandate for business development and support of investment projects in the Arctic.
The main objectives of economic development in the Russian Arctic were defined in the “Strategy for the Development and National Security in the Arctic Zone of the Russian Federation for the period until 2035” (which covers the major part of the Kola Projects potential life of mine) and include the implementation of a special economic regime in the Arctic that promotes private investment in mining, creation of new and modernization of existing industrial facilities and the development of new mines. These tasks can be achieved through a series of measures, an example of which is the establishment of a simpler procedure of land allocation for mining in the Arctic.
Russian laws set out the scope of measures and instruments of investment and business support in the Arctic, in particular, it provides for:
· The right of registered Arctic residents to get land lease for their projects in an out-of-auction procedure, whereby it can be the Arctic management company that grants such lease right to land plots in state or municipal ownership. This regulation considerably simplifies and speeds up the process of obtaining land lease rights (Article 15 Law 193; Resolution of the Russian Government No. 91 dated 1 February 2021 “On the Approval of the Rules of Granting Land Plots in State or Municipal Ownership and Located in the Arctic into Lease by the Management Company of the Arctic”). This enforces the titles to the projects in addition to mining related licenses and potentially speeds up the development of mines;
· Tax incentives and non-tax benefits;
· Legal defence of rights and lawful interests of registered Arctic residents by the Arctic management company (Article 17 Law 193).
Companies that intend to use tax incentives and investment support in the Arctic shall apply for Arctic residency status. Taking into account the above incentives, Eurasia has started cooperation with ERDC and filed an application for the inclusion in the register of Arctic residents to be able to enjoy the incentives, benefits and administrative support granted to the investors in the region. This application has now been approved.
In the framework of this application, Eurasia has signed the ERDC Agreement providing that ERDC shall procure:
(i) land use rights for all Eurasia’s projects in the Arctic (both Eurasia’s own and all projects included in the binding agreement with Rosgeo), which will be an important contribution to an uninhibited development of the projects in the region. All the land plots of all Eurasia’s projects on Kola and all projects included in the agreement with Rosgeo are included in the Appendix to the ERDC Agreement.
(ii) investment and business support for Eurasia and incentives (such as tax benefits including, but not limited to a 50% reduction of mineral resources mining tax (NDPI), partial repayment from the budget of social security contributions, so that the effective current rate of social security contributions would be 7.6%; non -tax benefits (subsidised interest rates on bank loans, reduced tariffs for utilities including gas, electricity and water);
(iii) assistance with the long-term contracting of green electric energy (hydro energy) in the region (with no CO2 emissions) that will further contribute to Eurasia’s ESG credentials;
(iv) assistance with other matters which may include various issues including, but not limited to mining licensing support.
The investment commitment (both equity and debt – the “Investment Commitment”) planned over the course of the 10-year term of the ERDC Agreement is expected be about 3b RUB (c.$40m). The prime purpose of the Investment Commitment is the development of the projects included in the agreement with Rosgeo as announced via RNS on 26 March 2021. These projects are anticipated to employ at least 200 people in the Arctic. The Investment Commitment of the ERDC Agreement is non-binding.
ERDC is a Russian state corporation established for the purpose of managing the Arctic, Far East and the free port of Vladivostok and facilitating progressive economic development in these regions. ERDC reports to Russia’s President’s Envoy in the Far East and Arctic (ex-Minister of Natural Resources) and the Ministry for the Development of the Far East and Arctic.
Christian Schaffalitzky, Executive Chairman of Eurasia commented: ” The Directors are delighted to sign this legally binding agreement with ERDC, that helps strengthen our titles to the projects also via all the respective land plots. The ERDC Agreement is a critically important milestone in developing our strategic options both in relation to the confirmation of our ownership titles and in relation to various tax and non-tax benefits adding further value to the Company “.
James Nieuwenhuys, CEO and Managing Director of Eurasia commented: “We have galvanized our titles to the projects and enjoy strong state support now also from state-owned ERDC reporting to Russia’s President’s Envoy in the Far East District and Arctic, a former Minister of Natural Resources. Altogether it results in strong political support from several government bodies that collectively strive for continuous economic development and a stable social situation and are interested in supporting investments in the Arctic, where all the Kola Projects are located. The ERDC agreement will benefit both the existing projects in the Kola and future projects Eurasia might undertake in the Arctic.”
A copy of this announcement is also available on Eurasia’s website at:
For further information, please contact:
Eurasia Mining Plc
+44 (0) 20 7932 0418
Christian Schaffalitzky / Keith Byrne
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