Mechel Reports Winning Subsoil License for Pionerskoye Iron Ore Deposit

Mechel OAO MTL reports winning the auction for the subsoil license for Pionerskoye iron ore deposit. The auction was held by Russia's Federal Subsoil Use Agency (Rosnedra), with the results announced on June 20, 2011. Yakutugol OAO won the subsoil license. In accordance with the tender's chief criteria, the coal company has the required financial and technical means to develop Pionerskoye deposit. The subsoil license cost 330 million rubles (approximately 11.7 million U.S. dollars*) and was granted for the term of 20 years. Pionerskoye deposit is located in the Republic of Sakha (Yakutia)'s Neryungri Region some 127 kilometers from the city of Neryungri and is part of the Southern Aldan iron ore area. Some 25 kilometers to the east of the deposit is a railroad link to the Trans-Siberian Railway, an automobile road and power lines. Pionerskoye's estimated reserves as of January 1, 2010 were 137 million tonnes of iron ore with high iron content, which will enable the company to produce iron ore concentrate at the early stages of development without the need to use complex beneficiation technologies. Prospective additional reserves are estimated at 750 million tonnes of ore. The deposit also has dolomite reserves, which can be used to produce refractories.