Russia's Polymetal starts construction at new gold mine
MOSCOW, Nov 12 (Reuters) - Russian gold and silver producerPolymetal has begun construction at its new Nezhdagold mine in eastern Siberia, which will contribute to itsdividends in 2022, it said on Monday.
The London-listed firm, part-owned by businessman AlexanderNesis, is starting this new project with pre-production capitalexpenditures estimated at $234 million a few months after itlaunched its Kyzyl mine in Kazakhstan. "Nezhda is a long-life, high-grade asset with robusteconomics," said Vitaly Nesis, Polymetal chief executive andbrother of Alexander Nesis.
The first production at Nezhda is planned for the lastquarter of 2021, with ramp-up by the second quarter of 2022. Themine will produce gravity gold concentrate which will then beprocessed at Polymetal's existing Amursk POX plant, whileNezhda's flotation concentrates will be sold to third parties.
The mine's annual production is seen at 180,000 ouncesduring the first full three years of operation and 155,000ounces of payable gold during the first full 15 years ofoperation.
The plan includes 19 years of open-pit mining in 2019-2037,and 17 years of production from underground ore from 2029 to2045.
Polymetal added that the project's internal rate of return(IRR), a metric to estimate the profitability of potentialinvestments, is estimated at 29 percent with net present value(NPV) of $302 million using a gold price of $1,200 per ounce and a currency rate of 63 roubles per $1.
Total cash costs (TCC) for the open pit will be in the rangeof $620-670 per ounce of gold equivalent (GE), which is a mix ofgold and other metals. Life of mine TCC is expected in the rangeof $700-750 per ounce of GE.
(Reporting by Polina Devitt; editing by Louise Heavens)
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