Russian precious metals producer Polymetal (LSE: POLY) is going ahead with its US$80 million Kutyn gold project, which is expected to offset declining volumes from the company's nearby Albazino mine.
Pre-stripping at Kutyn, located in the Khabarovsk Territory in Far East Russia, will start in the third quarter of 2021, with first ore set to be mined in 2022.
The company is targeting first gold production at Kutyn in the spring of 2023. The mine is expected to produce about 90,000 oz. gold per year.
Polymetal said management had decided not to proceed with a project to double underground mining capacity at Albazino to 1.2 million tonnes a year.
Albazino was long considered an integral part of the group's largest project, the Amursk POX Hub.
"After thorough evaluation, the board has concluded that Kutyn belongs in Polymetal's asset portfolio," chief executive Vitaly Nesis stated in a statement. "The key factors behind this decision are quick and capital-light path to significant free cash flows, as well as potential for a long mine life as a part of the Albazino hub."
Polymetal bought the asset for almost US$66 million in shares in 2011, at a time when the gold price was $1,400 per ounce.
The company, part-owned by businessman Alexander Nesis, the CEO's brother, subsequently spent US$55-million on exploration and site infrastructure.
Kutyn's estimated output has been pegged at 90,000 oz., with all-in sustaining costs of only US$590 per ounce.
The mine has reserves of 8.4 million tonnes of oxide ore, with an average grade of 3 grams gold per tonne containing 0.812-million ounces. Mineral resources amount to 6.6 million tonnes of oxide and refractory ore for open pit and underground mining, with an average grade of 3.7 grams gold, representing 0.785-million contained oz. gold.
- This article first appeared in MINING.com, part of Glacier Resource Innovation Group.