UPDATE 2-Russia's Onexim to spend $10 bln on mine projects

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By Polina Devitt

MOSCOW, July 24 (Reuters) - Russian billionaire Mikhail Prokhorov has launched a new exploration company, Intergeo, that will invest over $10 billion in the next five years developing copper, nickel, molybdenum, titanium and precious metals fields.

Prokhorov, a former co-owner and chief executive of Norilsk Nickel (GMKN.MM), is hiring several geologists from his old firm to pursue his goal of creating a top-three global metals miner based on deposits throughout Siberia and northwest Russia.

"Intergeo is prepared to attract operational and strategic partners with the aim of starting mining as soon as possible at its own deposits," the company said in a presentation by Onexim Group, Prokhorov's investment vehicle.

Russia is the world's biggest producer of nickel and palladium and the second-largest platinum miner. Its metal companies have enjoyed bumper profits in recent years on the back of a China-driven boom in commodities demand.

Intergeo will spend over $250 million in the next two years on exploration at existing licences within the group, Onexim said in the presentation on its Internet blog.

Onexim Chief Executive Dmitry Razumov told reporters, however, that the group had withdrawn from a September auction for the right to mine the enormous Udokan copper field in Siberia. Onexim had earlier signalled its intention to bid.

"We have decided to withdraw from the auction because of a conflict of interests with Norilsk Nickel. We would like Norilsk to win in this tender and wish it success," Razumov said.

He said Onexim would instead consider becoming the operating company for the Udokan deposit at a later date. Among the bidders are Norilsk Nickel, billionaire Oleg Deripaska's Strikeforce Mining and Resources Ltd, iron miner Metalloinvest and a consortium led by state rail monopoly Russian Railways.

Prokhorov has this year sold his 25 percent-plus-two-shares stake in Norilsk Nickel to the world's top aluminium producer United Company RUSAL in exchange for a 14 percent stake in RUSAL and an unspecified sum of money.

RESOURCES

Intergeo is targeting annual copper output of 280,000 tonnes and 150,000 tonnes a year of nickel production -- slightly more than half the amount produced last year by Norilsk, the world's largest nickel miner.

Intergeo also plans to produce 15,000 tonnes a year of molybdenum, 120,000 tonnes of titanium and over 17 tonnes (546,560 ounces) of gold. It did not give a time scale. In the presentation, Onexim said its new exploration unit held copper reserves and resources in excess of 15 million tonnes, more than 9 million tonnes of nickel and 1 million tonnes of molydenum.

Platinum group metals reserves and resources totalled more than 750 tonnes and titanium over 90 million tonnes, Onexim said, without saying how these resources were calculated.

Among the company's employees will be Norilsk Nickel geological manager Maxim Finsky, it said.

"The legal forming of Intergeo will be completed before the end of 2008," Razumov said. (Writing by Robin Paxton, Editing by Peter Blackburn)