Polymetal launches power line to Nezhda, expects cost reduction

YAKUTSK. Aug 24 (Interfax) - Polymetal , Russia's largest silver producer and one of the country's biggest gold miners, has launched a 254-km 110-kV power line from Khandyga to its Nezhda gold deposit, the leader of Yakutia, Aisen Nikolayev told reporters on Wednesday.

"The Nezhda production site was previously supplied with electricity by its own diesel power plant. After Nezhda's connection to power grids, the existing power plant will become a backup power source. Connection to power grids will improve the economics of the enterprise and significantly reduces environmental impact," Nikolayev said.

The line runs from the substation in Khandyga to the Nezhda production site, and in future it could supply power to other deposits in the Tomponsky district and the village of Tyoply Klyuch.

"The construction of the new power line has, foremost, a very significant economic effect. We expect that the switch from diesel fuel to grid power will reduce gold production costs by about 15-20%. Furthermore, the carbon footprint of the enterprise will decrease by about 60-70% and could decrease further after the signing of a direct contract with the Vilyuiskaya hydropower plant," Polymetal CEO Vitaly Nesis said.

Polymetal previously estimated that the switch from diesel to grid power would reduce Nezhda's total cash cost (TCC) by about $40 per ounce.

Polymetal said that the Far East and Arctic Development Fund (FEDF) and Credit Bank of Moscow (CBM) would finance the construction of the line and the Nezhda substation with a ten-year loan and five-year credit. The overall cost of the line was estimated at 6 billion rubles, not including value-added tax. It was built by Yuzhno-Verkhoyanskiye Energoseti, an independent power grid management company that will also own and service the line.

Nezhda, Russia's fourth largest gold deposit, includes an open-pit mine and processing plant with capacity for 2.2 million tonnes of ore per year. It went into operation at the end of 2021, and its gold recovery plant expects to produce its fifth tonne of gold in the next few days, according to the regional authorities.