Russia’s largest gold producer Polyus has raised by $1 billion to $3.3 billion its investment forecast for its Sukhoi Log gold deposit in Siberia, a flagship project that will double its production from 2027.
Last month, Polyus said the Sukhoi Log deposit was the world’s largest by reserves.
Polyus has finished a pre-feasibility study for Sukhoi Log and now expects capital expenditure at $3.3 billion, up from the 2018 estimate of $2.3 billion, the company said in a statement on Thursday, as it reported a 56% rise in third-quarter adjusted core earnings.
The deposit’s average annual production is now seen at 2.3 million ounces – equivalent to 81% of Polyus’ total gold production in 2019. The company had previously forecast output at 1.6 million ounces.
It plans to publish the feasibility study in the second half of 2022 and sees the first gold being poured in 2027.
Polyus and state conglomerate Rostec acquired the rights to develop Sukhoi Log, estimated to contain a fifth of Russia’s gold reserves, in 2017. Polyus bought out Rostec from the venture last month.
It described Sukhoi Log as the “cornerstone of Polyus’ long-term growth strategy”.
The additional 40 million ounces of reserves from Sukhoi Log secured Polyus’ position as the world’s leading gold mining company by attributable reserves, along with Newmont, it said.
Polyus said on Thursday third-quarter adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 56% year-on-year to $1.1 billion due to a 29% increase in average gold prices and sales.
“For the first time in the company’s history EBITDA surpassed the $1 billion threshold, setting a new record high at $1.1 billion,” said Polyus Chief Executive Pavel Grachev.
Polyus shares rose 1.2%, outperforming the wider index .
Polyus said it plans to produce 2.8 million troy ounces of gold in 2020 with capital expenditure expected between $700 million and $750 million.
(By Alexander Marrow and Anastasia Lyrchikova; Editing by Katya Golubkova and Emelia Sithole-Matarise)