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Incident at Mir mine won’t affect Alrosa's diamond production performance — experts

August 04, 2017, 18:22 UTC+3 MOSCOW

The mine has been in operation since 2009

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© Press Office of Yakutia's Rescue Service/TASS

MOSCOW, August 4. /TASS/. The incident at the underground mine of Russian diamond producer Alrosa in Yakutia will not affect the company's production performance, according to the analysts interviewed by TASS.

Earlier on Friday, a flooding incident occurred at the company’s Mir underground mine.

A rescue operation was launched.

According to Boris Sinitsyn of VTB Capital, the company will be able to continue production of diamonds at the mine.

"There were problems with the water inflow at the Mir mine, and at times it affected the production. It is likely that production will continue, because there is a possibility to contain water inflow," he told TASS.

The Mir mine accounts for about 10-11% of Alrosa's production, Vladimir Sklyar, director of Renaissance Capital for the electricity, metallurgy and fertilizers industry, said.

"This is a fairly significant part of production, but we must understand that in the short term, the volumes that have been lost can be compensated by mining at other mines and also by selling diamonds from stocks. Investors were quite anxious about possible reduction in production, but it seems to us that the accident will not affect even the company's quarterly results, "Sklyar said.

The shares of Alrosa on the Moscow Stock Exchange fell by 2.5% to 81.9 rubles ($1.35) per share after the news about the flooding incident.

As of 4:31 pm Moscow time, shares of Alrosa traded with a decrease of 0.74% - 83.39 rubles ($1.4) per share.

Accidents at the mine

On Friday, August 4, around 5 pm local time, the underground mine of the Mirny Mining and Processing Division was flooded as a result of water runoff. According to preliminary data, at that time 151 miners worked at the location. The rescue operation continues.

An investigation into the causes of the incident is under way. The inspection is conducted on the grounds of violation of Part 1 of Art. 216 of Russia’s Criminal Code (Violation of safety rules during mining operations).

This is the second emergency situation occurring in the mine within one week. On July 29, a rock slide buried a loading machine. One mineworker was injured.

About Mir underground mine

This mine has been in operation since 2009. It is operated by Mirny Mining and Processing Division.

Diamond content of the pipe is high and the average diamond grade exceeds 3 carats per tonne. Diamond output in 2016 totaled 3.19 million carats.

Alrosa is a group of Russian diamond producers. It mines diamonds on the territory of the Republic of Sakha (Yakutia) and the Arkhangelsk region. The largest shareholders of Alrosa are the Russian Federation (33.02%), the Republic of Sakha (Yakutia) - 25%, uluses (districts) of Yakutia - 8%, and 34% of the company’s shares are in free float.

In 2016, Alrosa produced 37.4 million carats, sales of rough diamonds totaled 40 million carats, in monetary terms sales of rough diamonds were $4.4 billion.

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