Mechel Signs US$210 mln loan to finance construction of second line at Sibirginskaya Mine

According to the terms of the agreement, Transcreditbank grants Southern Kuzbass Coal Company a loan of 6.189 billion rubles (approximately 210.4 million US dollars). The funds must be disbursed by December 31, 2012, and will be repaid in equal monthly installments, beginning in February 2014 and through December 2015.

The loan will finance equipment acquisition, construction of the surface complex’s buildings and excavation for the Sibirginskaya mine’s second line, which will bring the enterprise’s capacity up to 2.4 million tonnes of coal per year.

The increase of production volumes at the Sibirginskaya mine will be achieved gradually, with the second line scheduled to be launched in October 2014.

Sibirginskaya’s first line is operating with a design load of 1.2 million tonnes a year, with the plant’s ultimate reserves set at over 90 million tonnes.

Stanislav Ploshchenko, Mechel’s Chief Financial Officer, commented, “We signed a loan agreement to finance a major project in our coal division scant days after the announcement of our successful 2010 operational results, which showed that we managed to overcome the crisis and exceed our pre-crisis production levels. This deal testifies to the legitimate confidence banks have in Mechel. When the Sibirginskaya mine’s second line is launched, it will double the production capacity of the plant producing valuable coking coal grades, which makes this project particularly important.”