Russia's IRC says new iron ore mine on stream this year despite delays
HK-listed shares surge as Russian firm says new mine to come on stream in second half
Shares of IRC, a Russian iron ore miner serving the northeast China market, surged as much as 18.8 per cent on Friday after it said its new mine was expected to come on stream in the second half of the year and run at full capacity in the fourth quarter.
Its share price was also buoyed by IRC's announcement that work on a 2.2km bridge linking Siberia and northeast China had moved forward and was scheduled for completion by the end of next year.
It will cut the transportation cost of iron ore produced at its Kimkanskoye & Sutarskoye (K&S) mine by half, or US$5.50 a tonne.
"K&S remains capable of generating good [profit] margins despite the current low price environment," Jay Hambro, IRC's chairman and controlling shareholder said in a filing to Hong Kong's stock exchange.
Iron ore prices have fallen to around US$65 a tonne since the start of last year, and dipped to as low as US$47 in mid-April.
IRC has cut the targeted cash operating cost of K&S between next year and 2018 from a previous estimate of US$49 a tonne to US$31 a tonne, after the rouble depreciated sharply against the US dollar and a change in its mining plan. The change means the firm will concentrate on extracting ores from areas in the mine with lower production costs, although this has cut the mine's estimate production life to 20 years from 30 years.