ABOUT US
IRC is the largest iron ore mining operator in the Russian Far East. Our long-term relationships with customers in China and Russia, as well as our world-class operations, enable us to focus on producing high-quality iron ore concentrates.

WHY IRC
IRC stands out in the iron ore market due to its competitive advantages, namely superior geology and direct access to China, the world’s largest iron ore market, through established world-class infrastructure.

OUR FUTURE
K&S mine, our flagship 3.2 million tonnes per annum project, produces high quality 65% iron ore concentrate and is operating at a high capacity. In the long term, we have the options to boost the Group’s production capacity by adding processing equipment to K&S (“Phase II”), and also by developing other exploration projects of IRC.

OUR PROJECTS

K&S
100% owned

OVERVIEW
K&S, 100% owned by IRC, is located in the Jewish Autonomous Region (EAO) of the Russian Far East. It is the second full-scale mining and processing operation that the Group has developed. The project consists of two principal deposits, Kimkan and Sutara. The K&S Phase I is designed to produce 3.2 million tonnes of iron ore concentrate per annum with a grade of 65% Fe. The Phase I Processing Plant was built by CNEEC. According to the development timeline for K&S Phase I project, Sutara deposit will begin to be mined in parallel with Kimkan deposit in 2024, and Sutara’s mine life will be more than 30 years. There is an option for a Phase II expansion to produce a total of 6.3 million tonnes of 65% iron ore concentrate per annum. As an interim development between the two phases, IRC is assessing an option to upgrade the Phase I production facility to increase the production capacity to approximately 4.6 million tonnes per annum.

K&S enjoys tremendous geographical advantage. The Trans-Siberian Railway is directly linked to the mine site, making it easy to deliver its product to customers. With the use of the Amur River Bridge, which opened to traffic in 2022, the products shipping distance for IRC and its customers can be further reduced.

K&S’s operation is situated 4 kilometres from the Izvestkovaya town and railway station, through which the Trans-Siberian Railway passes. It is also on a federal highway 130 kilometres away from the regional capital Birobidzhan and 300 kilometres from Khabarovsk, the principal city of the Russian Far East.

OPERATIONAL PERFORMANCE IN 2023
During 2023, K&S demonstrated stable performance despite certain challenges. In May 2023, K&S’s pulp pumps malfunctioned due to presumed electrical issues stemming from the external grid. This led to water overflow in the pulp pumping station, necessitating the suspension of K&S’s production for approximately one week. Swift actions were taken to address the issue, and the problem was successfully rectified by the end of May 2023. The incident, while disruptive, prompted the project team to bolster their contingency planning and further fortify the infrastructure against potential disruptions.

Production in 2023 was also hampered by the lower yield of iron ore concentrate from ore due to the lower content of Femagn in the ore processed. Another unfavourable factor was the underperformance of the mining contractors resulting from the low readiness of the equipment due to technical issues.

In 2023, K&S operated at an average capacity of approximately 78%. Production volume was 4.0% lower than the previous year, whereas sales were 1.5% lower.

SALES AND MARKETING
During 2023, K&S continued using the Amur River Bridge for railway shipments to the Chinese customers. During the year, approximately 687Kt of K&S’s sales were shipped via the bridge.

In the initial part of 2023, K&S recommenced the seaborne sales. As the macroeconomic situation changed, there were no sea shipments in the latter part of 2023.

SUTARA PIT
Sutara deposit, which is situated approximately 15 km south-south-west of Kimkan, will be providing iron ore material to the processing plant and extend the mine life of K&S as Kimkan deposit approaches depletion. As the development of the Kimkan Central pit advances, K&S has started to mine at the Kimkan West pit, which has lower grades of iron ore magnetic properties than Kimkan Central. Beneficiation properties of the ore blend fed to the processing plant have resulted in a lower yield of commercial concentrate from the ore than designed. This is currently affecting K&S’s ability to increase production capacity. The production capacity issues are expected to improve when the Sutara pit becomes operational. The Company expects the Sutara pit will be the long-term solution as the geological information confirms that the ore at Sutara has higher grades of iron magnetic properties.

In 2023, K&S continued development of the Sutara project. A power line to Sutara was successfully completed and put into operation. Construction of the modular crushing and screening complex, the permanent reinforced-concrete bridge over the Sutara River and the overpass on the federal highway commenced and have been progressing well. The roadbed of the permanent access road to Sutara was completed; road surface dressing commenced. At the Sutara deposit, stripping and dewatering works are ongoing.

It is estimated that mining operations at Sutara will start in the first half of 2024 and processing of Sutara ore will start in mid-2024, after necessary permits are obtained.

It is estimated that the total initial capital expenditure required to bring the Sutara pit into operation would amount to approximately US$50.4 million. Up to 31 December 2023, approximately US$29.2 million had been incurred. The remaining sum of US$21.2 million of the pre-production capital expenditure is expected to be self-funded by cashflow generated by K&S.

MINING
Currently, K&S does not have its own mining fleet, and the mining works on site are carried by third-party mining contractors. During the reporting period, the mining contractors moved 19,794,300 cubic metres of rock mass, which represents 11% increase from the same period last year. This includes 9,237,000 tonnes of ore, a 4% increase in tonnage compared to 2022. Stripping ratio (ratio of the volume of overburden that must be removed to the tonnage of ore mined) increased by 10% in 2023 compared to 2022.

PRODUCTION
During the year, 9,124,300 tonnes of ore were fed to primary processing, 4% more than in 2022. 2,239,668 tonnes of pre-concentrate were produced, also a 4% increase compared to 2022. However, due to the lower grades and hence the yields, commercial iron ore concentrate production volume in 2023 was 4% lower than in 2022: 2,466,829 tonnes (2022: 2,569,845 tonnes).

UNIT CASH COST
In 2023, the unit cash cost per dry metric tonne totalled US$85.4 (excluding transportation: US$68.1).

K&S’s rouble-denominated cash cost is likely to rise in the short and medium term, due to the longer transport distance of ore from Sutara deposit to Kimkan processing plant, as well as general inflation in Russia. Also, in September 2023, Russian government introduced a temporary export duty based on the RUB exchange rate for exports outside the Eurasian Economic Union. The export duty applies to most exports, including iron ore concentrate. The temporary export duty applies from 1 October 2023 to 31 December 2024, which will affect K&S’s cash costs.

However, once Sutara ramps up to full production capacity, with the ore quality being anticipated to improve, there is room for K&S to keep costs under control.

SAFETY
LTIFR is a calculation of the number of lost-time injuries per one million hours man-worked. During the reporting period, K&S maintained a high level of safety with 3 injuries (2022 injuries: 2), 0 fatalities (2022 fatalities: 0), and a LTIFR of 1.08 (2022 LTIFR: 0.66). K&S will be working on further improvement of LTIFR.

IMPACT OF SANCTIONS AGAINST RUSSIA
IRC is listed on the Hong Kong Stock Exchange with operational mines in Russian Far East. Most of the Group’s suppliers and customers are based in China and Russia. The Company continues to review and consider the impact, if any, of the UK, EU and US sanctions. As of now, and so far as the Board is aware, based on its current assessment and the information currently available, the sanctions have no material direct impact on the Group or its operations. Although the Group’s operations and activities in Russia and elsewhere are currently continuing as usual, as the
geopolitical situation continues to develop, there is a risk of supply chain disruptions affecting K&S’s operation, the purchase of mining fleet and the development of the Sutara pit. IRC will continue to closely monitor sanctions developments and will, if necessary, make further announcement(s).

Garinskoye
99.6% owned

OVERVIEW
Garinskoye, 99.6% owned by IRC, is an advanced exploration project. The project provides an opportunity for a low-cost DSO-style operation that can be transformed into a large-scale and long-life open pit mining operation.

The project is located in the Amur Region of the Russian Far East, midway between the BAM and Trans-Siberian Railways. With exploration licences for ground covering an area of over 3,500 km2, the project is the largest in the IRC portfolio in terms of area.

FUTURE DEVELOPMENT
There are two possibilities to develop Garinskoye. The first option is to develop a large-scale 4.6 million tonnes per annum open-pit operation with a life-of-mine of 20 plus years, which requires the construction of a rail connection. The second option is an intermediate DSO-style operation that does not require a rail connection and can be started in advance of a larger conventional operation. The DSO-style plan comprises a pit with a reserve of 26.2 million tonnes, a grade of 47% Fe, and a stripping ratio of 1.7:1 m 3 per tonne. The DSO-style plan would then be able to produce 1.9 million tonnes per annum, with 55% grade iron ore fines and a life of operation of 8 years. There is an option to further increase the project value at very little additional capital expenditure by adding a further wet magnetic separation stage to produce a high-grade “super-concentrate” with a 68% iron ore content.

In 2013, IRC conducted an internal Bankable Feasibility Study. A third-party verification and a fatal flaws analysis for the DSO-style operation was carried out in 2014.

The Company is currently reviewing the options on how to move the project forward.

Other Projects
EXPLORATION PROJECTS & OTHERS
IRC’s other exploration projects comprise an extensive portfolio that is diversified by geography, commodity and development stages. This seeks to add value through the discovery of new resources and the increase and confirmation of mineable reserves. Currently, IRC retains these valuable licenses for later development. Apart from exploration projects, IRC is also active in the complementary business of the Steel Slag Reprocessing Plant (SRP) and a mining consultancy services agency (Giproruda). SRP project, a joint venture with Jianlong Steel, originally sourced the feedstock from Kuranakh, and as Kuranakh was moved to care and maintenance in 2016, and then liquidated in 2021, the plant successfully switched to the local Chinese feedstock. Due to the relatively small scale of the project, SRP’s contribution to the Group results is not material. Below is a summary of the current portfolio of exploration projects for the Group:

 

Project Products/Service Location
Bolshoi Seym (100% owned)  Ilmenite Amur Region, Russian Far East
SRP (46% owned)  Vanadium Pentoxide Heilongjiang, China
Giproruda (70% owned) Technical mining research St. Peterburg, Russia