Polyus Gold International, the largest gold producer in Russia, has decided, in light of the challenging market conditions, to re-sequence the development of the Natalka project (to be Russia’s largest gold mine) and delay the launch of the plant to summer 2015 from the previously announced target of summer 2014. Although it is operationally possible to commence gold production at the Natalka mine as previously planned, Polyus Gold deems it prudent to postpone its commissioning given the recent substantial decline in the gold price and the possibility of further weakness. The decision to extend the construction schedule will, therefore, enable Polyus Gold to better balance the capital requirements of Natalka with the need to maintain a sound balance sheet and robust funding position in the uncertain macro environment. Further to a deferral of the project’s residual capex, the re-sequencing will allow the company to identify additional cost and operational efficiencies, including the optimisation of capital and operating expenditures, improvements to the project design and the potential implementation of the photo metric separation technology (optical sorting) as a way to pre-enrich the ore.

Polyus Gold expects to finalise a detailed plan of improvements to the project by the middle of 2014 following a thorough project assessment review scheduled for H1 2014. In the meantime, construction works onsite will continue, albeit at a slower pace as compared to previously planned. Mining works which actively commenced in 2013 in accordance with the license terms will also continue.

Pavel Grachev, Interim Chief Executive Officer of Polyus Gold: “Polyus Gold remains fully committed to bringing Natalka on stream. Once in operation, it will be Russia’s largest gold mine with its first stage producing an average of 500,000 oz/y of gold. The gold mining sector has to adapt to a tough business environment today, with the gold price decrease of 30% over the last 12 months to the level of $1,200/oz. Moreover, there is a possibility of further decline. In light of these challenges, we will advance the project in a prudent manner so as to benefit from an extended construction schedule and seize every opportunity to improve the project’s economics to ensure maximum returns to all our stakeholders, including shareholders, authorities and local communities.”

Natalka has the potential to eventually reach an annual output of 1.5 Moz. It is located about 400 km from the sea port of Magadan in the Far East of Russia, Natalka is one of the largest known undeveloped gold deposits in the world. The mine is expected to have a processing capacity of 10 Mt/y of ore at the launch of its operations. Following a stage by stage increase of the mill throughput to 40 Mt of ore annually (conventional shovel-and-truck open-pit operation).

Gold reserves (Proven and Probable) amount to 31.6 Moz and resources (Measured, Indicated and Inferred) are estimated at 59.7 Moz.