EXCLUSIVE "Moldomin" is bankrupt, but has copper reserves worth 1 billion Euros

• The receiver will auction off the viable mines

• Six investors are interested

The mines of SC "Moldomin" SA Moldova Nouă are currently in the process of being auctioned off, together with their operating license. The mines and the copper reserves are worth approximately 1 billion Euros, said Răzvan Zăvăleanu, managing partner of "RTZ & Partners", the receiver of "Moldomin".

He had the following to say about this rather unusual privatization process: "The company owes about 50 million Euros, mostly to the state. The ANAF (ed. note: National Tax Administration Agency), the company"s main creditor, recently opened the bankruptcy procedure for Moldomin, for which we evaluated all its assets, including the mines, their potential and the value of their exploitations based on the massive investments they made into their retooling. Basically, what we are doing is not selling the company off piece by piece, we are privatizing it, with the involvement of the ANRM (National Agency for Mineral Resources) and of various decision makers of the state and what we are doing now is selecting an investor. The company"s copper exploitations must be taken over by strong companies, which have experience in the industry, which would continue the mining operations with modern technology and protecting the environment".

In order to be profitable, the copper mines need investments of about 150 million Euros. Even though not all the reserves are exploitable, after the modernization, investors could make a profit of 3-400 million Euros, given the current trends and prices for metals on the international markets, the representative of "RTZ & Partners" said.

The receiver of "Moldomin" and the Romanian authorities have been negotiating with six private investors of the USA, Canada, China and Israel.

"Only some of them went further with the negotiations and with concrete offers, but we are in no hurry to do the privatization,", Răzvan Zăvăleanu said.

The strategy of the company"s receiver and of the authorities is to start a new campaign for attracting investors soon, in order to gather as many final offers as possible. Thus the auction will be advertised in the international press, in Germany and England in particular. The receiver is not allowed to decide by itself on who wins the auction, as the opinion of the ANRM will carry a lot of weight. "According to the usual concession procedures, the ANRM will decide, the winner, the expertise criteria that it needs to meet and the investments that it will be required to make after the privatization", Mr. Zăvăleanu added.

According to the receiver, the main hurdle in this particular privatization is the storage of the mine waste generated by the exploitation of the mine. The current storage capabilities do not allow the full exploitation of the existing copper deposits. We need to come up with a solution for safely creating these storage capabilities in a natural protected area.

Răzvan Zăvăleanu expects the privatization process to take another six month. The only assets of "Moldomin" that are still of interest are the surface mines, as the deep ones are in the process of being shut down. The exploitation licenses are valid for another 11-12 years.

Until its recent bankruptcy, SC "Moldomin" SA had begun dissolution and voluntary liquidation procedures. In July 2010, several of the company"s creditors requested the insolvency of the company. Also last year, the Office For The State"s Interests (OPSPI) received the first letter of intent by which a potential investor expressed its interest in collaborating on the extraction and processing of copper ore from the Moldova Nouă deposit.

According to "RTZ & Partners", "Moldomin" went bankrupt due to the state"s harmful policy of keeping the price of mined copper artificially low.