Kazakhstan-based copper company KAZ Minerals is set to acquire Baimskaya copper project located in Chukotka, Russia for $900m.

The project is being acquired from a group of investors including Chelsea Football Club owner Roman Abramovich.

The transaction value includes initial consideration of $675m for 75% interest in the project and deferred consideration of $225m for the remaining 25% interest.

“The acquisition of Baimskaya marks the next stage of the transformation of KAZ Minerals.”

The initial consideration of $675m includes $436m in cash and $239m in shares subject to a three-year lock-in agreement.

Aristus Holdings, a company owned and controlled by a consortium of investors including Abramovich and Alexander Abramov, was named as the seller of the project.

KAZ will pay the initial consideration during the first half of 2019 following the satisfaction of anti-monopoly and other regulatory approvals and satisfaction of certain other conditions.

As per the agreement, deferred consideration will be paid in equity consideration of up to 21.0 million shares following the satisfaction of project delivery conditions before 31 March 2029.

If project delivery conditions are not met, deferred cash consideration will be on the long stop date of 31 March 2029​.

The company expects that a capital expenditure of $5.5bn would be required to develop the mine.

KAZ Minerals chair Oleg Novachuk said: “The acquisition of Baimskaya marks the next stage of the transformation of KAZ Minerals.

“The development of this new project in Russia will enable the Group to continue its industry leading growth, delivering both value and volume as the copper market is forecast to enter a period of significant supply deficit.

“Through our successful execution of the Bozshakol and Aktogay projects in Kazakhstan we have built a track record for project execution which makes KAZ Minerals the ideal platform to develop this globally significant asset.”

Baimskaya is an undeveloped copper assets project with joint ore reserves committee (JORC) resources of 9.5Mt of copper at an average grade of 0.43% and 16.5Moz of gold at an average grade of 0.23 g/t.

The company expects that the project would generate an average annual production of 250kt copper and 400koz gold during the first ten years of operations and a mine life of approximately 25 years.

US-based multinational engineering and construction firm Fluor has completed the pre-feasibility study for the project.