Russian gold miner Polyus on Thursday provided an update on its Sukhoi Log project, one of the world’s largest untapped gold deposits. The news sent units of the company trading over the counter in the US up 3% for a market value of some $8.5 billion.
Polyus in May completed the scoping study and verification drilling programme at Sukhoi Log, located in the Irkutsk region of eastern Siberia, and is now entering the pre-feasibility stage with a study out early 2021.
The Moscow-based company, the world’s 7th largest listed gold producer, said it planned to make a final investment decision on Sukhoi Log, by 2020-2021 with a target for production start-up around 2026.
“We have made serious progress in the development of Sukhoi Log during the last 14 months following the acquisition of the licence,” chief executive Pavel Grachev said. “We see it as a cornerstone of the future development of Polyus.”
The company said it expected the capital outlay for construction to be $2 billion to $2.5 billion. Around $30 million will be spent on geological and engineering studies per year in the run-up to board approval for the project.
Polyus said the proposed Sukhoi Log processing plant would treat an average of 30 million tonnes of ore a year. It said it expected average annual production of around 1.6 million ounces with total cash costs of a stingy $420-470 per ounce.
That would place the proposed Sukhoi Log mine number at number two in terms of annual output behind state-owned Muruntau in Uzbekistan (which does not release production figures). Potential life of mine is pegged at 35 years.
The deposit was discovered in 1961 by the Bodaybo expedition and extensively explored by Soviet geologists in the 1970 to the 1990s.
In total over 320,000m of drilling have been carried out, including by a team from Canada’s Placer Dome (now Barrick Gold) in the late 1990s.
Polyus said it sees strong correlation of the results of verification drilling and the historical exploration data.
Polyus estimates resources at Sukhoi Log (which translates to “dry gully” in English) of 58m ounces of contained gold grading 2.0 g/t gold.
In terms of resources Sukhoi Log would be placed at number 4 on MINING.com’s ranking of the world’s largest gold deposits.
Polyus is the fastest growing gold mining company in the top tier upping output 9.6% last year to 2.16 million ounces.
The company’s Natalka project enters production last year and should lift gold production to above its stated target of 2.7 million ounces by 2020.