Russia`s Polymetal starts construction at new gold mine

According to Mining News Pro -MOSCOW, Nov 12 (Reuters) - Russian gold and silver producer Polymetal has begun construction at its new Nezhda gold mine in eastern Siberia, which will contribute to its dividends in 2022, it said on Monday.

The London-listed firm, part-owned by businessman Alexander Nesis, is starting this new project with pre-production capital expenditures estimated at $234 million a few months after it launched its Kyzyl mine in Kazakhstan. "Nezhda is a long-life, high-grade asset with robust economics," said Vitaly Nesis, Polymetal chief executive and brother of Alexander Nesis.


The first production at Nezhda is planned for the last quarter of 2021, with ramp-up by the second quarter of 2022. The mine will produce gravity gold concentrate which will then be processed at Polymetal`s existing Amursk POX plant, while Nezhda`s flotation concentrates will be sold to third parties.


The mine`s annual production is seen at 180,000 ounces during the first full three years of operation and 155,000 ounces of payable gold during the first full 15 years of operation.


The plan includes 19 years of open-pit mining in 2019-2037, and 17 years of production from underground ore from 2029 to 2045.

Polymetal added that the project`s internal rate of return (IRR), a metric to estimate the profitability of potential investments, 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 range of $620-670 per ounce of gold equivalent (GE), which is a mix of gold and other metals. Life of mine TCC is expected in the range of $700-750 per ounce of GE.


(Reporting by Polina Devitt; editing by Louise Heavens)

Messaging: polina.devitt.reuters.com@reuters.net))