IRKUTSK. Sept 12 (Interfax) - Vnesheconombank (VEB), LLC VEB Engineering and LLC Baikal Mining Company (BMC), a subsidiary of the Metalloinvest group, signed a letter of intent on cooperation on Monday.

The letter of intent, which was signed in Irkutsk by VEB deputy chief executive Anatoly Ballo, VEB Engineering board director Mikhail Rogachev and BMC general director Andrei Varichev, states that the parties are interested in implementing the project to develop the Udokan copper deposit in Trans-Baikal Territory, the license to which is held by BMC.

VEB pledges to provide a loan on project and/or commercial financing terms. The letter of intent does not specify the amount of the loan.

VEB Engineering will be involved in appraisal, structuring and support of the Udokan project, as well as the development of the optimal VEB financing facilities for the project.

BMC pledges to consider VEB as a strategic partner for the implementation of the project.

Varichev told reporters that the copper field is already accessible to transport and there are sufficient energy supplies to begin operations.

The feasibility study for the project will be ready in 18 months, he said.

Ballo, meanwhile, told reporters that VEB would not finance Udokan on its own.

"I don't rule out that this will be a consortium. I'm not ready to say what amount we are prepared [to finance - ed.], but we are planning to provide subordinated loans that the company will repay last," Ballo said.

He said VEB was prepared to arrange for foreign financing.

"In fact, there is already great interest from several financial institutions," Ballo said.

Commenting on the signing of the letter of intent, Varichev told Interfax on Monday that BMC hopes to secure a credit line of up to $3 billion from VEB, which would cover the costs of the first phase of Udokan's development.

He recalled that the whole project could cost $6 billion-$8 billion.

"But there is also an estimate for the first phase of the project, and it fits within VEB's parameters. They have a limit for one borrower. It is about $3 billion. And the cost estimate for the first phase of the project is also about $3 billion. We hope that external infrastructure will also be built with the support of VEB and the administration of Trans-Baikal Territory through the mechanism of a private-public partnership," Varichev said.

However, a large portion of the project will be financed with the company's own funds, he added.

Asked how much the company planned to borrow from VEB, Varichev said: "We would like to borrow as much as possible - about $3 billion. As I said, they have a limit for a single borrower, and we will fit into it."

The loan agreement will be signed once "we structure the project according to the bank's requirements," Varichev said. "The project has already successfully undergone a comprehensive assessment at the bank once. We hope that this will help us to undergo this process more quickly."

All the parameters of the project are preliminary and will be clarified during the design stage, he added.

It was reported earlier that the consortium of Metalloinvest and Russian Technologies is in talks with VTB and VEB for a credit line of $1.5 billion-$2 billion to finance the development of Udokan. The overall cost of the project with infrastructure is estimated at $6 billion-$8 billion.

Speaking at a plenary session of the Baikal Economic Forum, Varichev said that infrastructure projects in the northern part of Trans-Baikal need an estimated 75 billion rubles of investment. He said priority infrastructure projects include the electrification of the Baikal-Amur Mainline along the Taksimo-Tynda stretch of railroad, development of the Novaya Chara station, the connection of the unified energy systems of Siberia and the Far East and the development of the Chara airport.

"What will this achieve? Gross regional product will more than double, more than 13,000 jobs will be created at production facilities alone.[