Polyus Gold, the world’s eighth largest listed gold mining company in terms of output, announced on Tuesday it’s paying $146 million in shares for an additional 25% in Sukhoi Log, one of the world’s largest gold deposits.
Polyus will pay state-owned Russian conglomerate Rostec over five years and Tuesday’s transaction which follows an initial deal announced in December will eventually give the Moscow-based company total control over Sukhoi Log.
The deposit, located in the Irkutsk region of eastern Russia, was discovered in 1961 by the Bodaybo expedition and extensively explored by Soviet geologists in the 1970 to the 1990s. In total over 320,000m of drilling have been carried out, including by a team from Canada’s Placer Dome (now Barrick Gold) in the late 1990s.
A 2008 scoping study for Sukhoi Log (which translates to “dry gully” in English) estimates 930.3 million tonnes of ore, grading 2.1 g/t gold for 62.8 million ounces of contained gold under the Russian Resource Estimation Standard or GKZ. Polyus says additional exploration and work on a feasibility study would take another three to four years.
In terms of resources Sukhoi Log would be placed at number 4 on MINING.com’s ranking of the world’s largest gold deposits. Consultants Wood Mackenzie estimates production at Sukhoi Log could be between 1.7 million ounces to over 2 million ounces of gold per year (and not insignificant amounts of silver), putting it on par with Muruntau in Uzbekistan.
Polyus is the fastest growing gold mining company in the top tier upping output 12% last year to a shade below 2 million ounces. The company’s Natalka project which enters production at the end of the year should lift gold production to above its stated target of 2.7 million ounces by 2020.
Polyus’s 100%-owned Olympiada mine which accounts for a third of the company’s output sports reserves of over 47m ounces (number eight on the ranking). A weak rouble, some of the best grades in the business saw all-in-costs across its operations (which include alluvial mining) drop to below $600/oz last year.