Gazprombank has reportedly struck a deal to offload its 49% stake in the Elga coal project in Sakha Republic, Russia to Albert Avdolyan, a Russian telecommunications magnate.

The businessman’s company A-Property is also in talks to buy the remaining stake of 51% in the coal project, reported Reuters.

The publication citing two sources familiar with the talks said that Albert Avdolyan could sign a deal with Mechel by the end of next month to take full ownership in the Elga coal project, which produced 4,318 thousand tonnes of coal in 2019.

Earlier this week, it was reported that the Russian mining and steel company was in talks to sell its 51% stake in the coal mine in order to reduce its debt.

As of the end of last year, Mechel had a net debt of RUB400bn ($5.08bn) and is currently not in a position to complete repayments or make investments towards further development of the coal mine to exploit its 2.2 billion tonnes reserves.

Gazprombank did not reveal the price it is being offered by Albert Avdolyan for its stake in the coal project. However, Reuters citing one of its sources said that the Russian lender will be paid RUB45bn ($570m) for the stake.

Mechel, on the other hand, as per the same source, could be paid RUB95bn ($1.21bn) from the businessman.

Gazprombank bought its stake in the Elga coal project in mid-2016 from Mechel. The lender alongside VTB has been the creditor for the mining and steel company.

The coal mine involved in the potential deals is located in south-eastern Yakutia, nearly 415km east of Neryungri. Mining at the coal deposit was launched in 2011 and subsequently, the first phase of the project was executed, which included the construction of a mining facility that can annually produce 11.7 million tonnes of coal.