Polyus, Kinross to develop big Yakutian gold field

Polyus Gold, Russia's largest gold miner, intends to develop its large Nezhdaninskoye deposit in east Yakutia together with Canadian miner Kinross Gold Corp after signing a protocol on Monday.

Polyus and Kinross, owner of the large Kupol deposit in the remote Russian region of Chukotka, signed a deal that could eventually lead to the formation of a joint venture to develop Nezhdaninskoye, a Reuters reporter at the signing ceremony said.

The two companies plan within the next 18 months to prepare a feasibility study on the deposit, Russia's third-largest gold field, Polyus Chief Executive Yevgeny Ivanov told reporters.

He said the companies would then decide on whether to form a joint venture, in which Polyus could take a 51 percent stake.

An earlier study conducted by Polyus estimated investment in the Nezhdaninskoye project, located in the republic of Yakutia, at around $1 billion to reach annual production of 12 tonnes. The deposit is estimated to hold more than 500 tonnes of recoverable gold.

Ivanov and Kinross Chief Executive Tye Burt signed the protocol in Moscow, along with Vyacheslav Shtyrov, president of Yakutia.

Polyus, which has long-term plans to triple annual output from around 1.2 million ounces in 2007, initially planned to start developing the deposit in 2010, but said last year it would revise some projects because of the world economic crisis.

Kinross Gold opened its low-cost Kupol mine on the far eastern Chukotka peninsula last year. This mine alone is likely to propel the company to be Russia's No. 2 gold miner after Polyus. It estimates 2009 output in Russia at between 675,000 and 725,000 gold equivalent ounces, including some silver.

Kupol is one of three new mines that are expected to help boost Kinross's global production to as high as 2.5 million ounces this year.

Among Russian gold fields, Nezhdaninskoye trails only Sukhoi Log -- which has yet to be auctioned off by the government -- and Natalka in terms of size. Polyus also has the rights to develop Natalka, in Magadan region.

Asked whether the partnership with Kinross might be extended, Ivanov said: "It cannot be ruled out. There are no concrete plans right now. We are satisfied with how our relations are growing and hope for more."

// Jan. 26, 2009

Resource: Guardian