Nezhda gold project could start producing in 2021 - Polymetal
MOSCOW. March 15 (Interfax) - The Nezhda (Nezhdaninskoye) gold-silver project in Yakutia could come on stream in 2021, Polymetal , which owns 17.66% of the project and could increase its stake to 50%, said in materials.
A decision to advance the Nezhda project could technically be reached at the end of this year, Polymetal chief Vitaly Nesis said on a conference call.
However he said the company would likely delay this until the Kyzyl project, its main development project to present, starts to generate cash flow, and a decision on Nezhda is more likely in the fourth quarter of next year.
"I think there's quite a strong likelihood of movement on Nezhda. This is a robust asset with a substantial resource base, non-JORC, and which we hope to convert JORC this year," Nesis said.
Nezdha's reserves to Russian standards are 20 million ounces. Nesis has said a JORC estimate 0f 10 million oz "seems the most realistic."
Polymetal said that during 2016 it performed an extensive exploration campaign at Nezhda, Russia's fourth biggest gold deposit, obtaining significant additional comfort on the geology and metallurgy of the deposit. Diamond drilling totaling 39 km was completed at ore zone 1 of the Nezhda deposit in 2016. 141 ore intercepts have been traced in the southeast part of ore zone 1 with an average thickness of 5.3 m, and average grades from 2.3 g/t to 74.5 g/t for gold and 1.7 g/t to 54.6 g/t for silver. At the northwestern part of ore zone 1, 121 ore intercepts have been identified with an average thickness of 20.9 m, and grades from 1.1 g/t to 18.7 g/t for gold and 1.4 to 49.6 g/t for silver. In 2017 further exploration of ore zone 1 and adjacent areas is planned to expand open-pittable resources.
At the beginning of last year, Polymetal said it had acquired control of a 15.3% stake in the holding company that owns 100% of JSC South-Verkhoyansk Mining Company (SVMC). SVMC is the owner of the mining and exploration license for the Nezhdaninskoye gold deposit in Yakutia, as well as certain infrastructure adjacent to the deposit. Polyus Gold, Russia's biggest gold producer, remains the largest shareholder in Nezhdaninskoye.
Polymetal and Polyus Gold announced formation of a joint venture to develop Nezhdaninskoye in December 2015. During the first stage, Polymetal will obtain a 15.3% interest in the JV for a total investment of $18 million in cash, of which $10 million will ultimately be paid to Polyus Gold and $8 million will be invested in the project. Upon completion of Stage 1, Polymetal will have an option to participate in the second stage though an earn-in arrangement which will allow Polymetal to increase its share in the JV to 50% for another $72 million.
Polymetal said in a financial report to International Financial Reporting Standards (IFRS) on March 15 that it had increased its stake in SVMC to 17.66% in November for a cash consideration of $3 million.