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Russian precious metals producer Polymetal (MCX, LON: POLY) is going ahead with its $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.
Polymetal is targeting first gold production at Kutyn in the Spring of 2023.
The company is targeting first gold production at Kutyn in the Spring of 2023. The mine is expected to produce about 90,000 ounces of gold a 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 for 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 said in the 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 $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 $55-million on exploration and site infrastructure.
Kutyn’s estimated output has been pegged at 90,000 ounces, with all in sustaining cost of only $590 per ounce.
The mine has ore reserves of 8.4 million tonnes of oxide ore, with an average grade of 3 g/t 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 g.t, representing 0.785-million ounces of gold contained.
