Polyus reports development progress at Russia’s largest gold deposit Sukhoi Log

Polyus has presented its update on the development progress at Sukhoi Log. It has recently completed the scoping study and verification drilling programme. The scoping study has outlined key directions of further geological, engineering and infrastructure development. With the scoping study completed, Sukhoi Log is now entering the pre-feasibility stage.

Pavel Grachev, Chief Executive Officer of PJSC Polyus, commented: “We have made serious progress in the development of Sukhoi Log during the last fourteen months following the acquisition of the license. We are now ready to share the key findings of this stage with the market. Sukhoi Log is a one-of-a kind deposit whose quality and scale are outstanding. We see it as a cornerstone of the future development of Polyus. While there is a long way to go until the production launch, we are committed to developing the asset in the most disciplined and efficient manner.”

The verification drilling programme of 43,000 m was completed in May 2018. The logging and interpretation of the verification drilling results are now being finalised. Based on the currently available data, Polyus sees strong reconciliation of the results of verification drilling and historical exploration programmes done during 1961-1993 in the amount of 318,000 m.

The estimated future parameters of the Sukhoi Log project are currently outlined as follows:

• Mill throughput capacity: 30 Mt/y
• Average waste-to-ore ratio: 2.2 t/t
• Average annual production: ca 1.6 moz
• Total cash cost: $420-470/oz
• Project construction Capex: $2.0-2.5 billion

The Sukhoi Log processing facility will use a conventional gravity/flotation process to treat an average of 30 Mt of ore per annum, with two parallel communition lines of 15 Mt/y processing capacity. Polyus expects a recovery of 88-90% to be achieved at the Sukhoi Log mill. Polyus plans to perform further testwork scheduled for 2018-2019. The proposed tailings storage facility (TSF) for the flotation tailings is located in the Dogaldyn River valley. The process plant will include a comminution circuit consisting of SAG mills, ball mills and recycle pebble crusher (SABC) followed by a gold extraction circuit.

The investment decision and start of construction capex spending are planned for 2020-2021. It is expected that production will start in or around 2026 assuming positive investment decision and financing secured. Prior to the investment decision, Polyus will be spending ca. $30 million per year for geological and engineering studies at Sukhoi Log. The next update of the economic parameters is expected after completion of the pre-feasibility study.

The drilling programme is expected to continue until 2019 and include 105 km of in-fill drilling (performed in 2018 and 2019); 18 km of geometallurgical, geotechnical, and hydrogeological drilling (performed in 2018); and 31 km of deep levels and flanks drilling (performed in 2019).

The Inferred Mineral Resources estimate currently stands at 58 Moz of gold at 2.0g/t. Measured & Indicated (M&I) Mineral Resources estimate is expected in the fourth quarter of 2018, while Proved & Probable (P&P) Ore Reserves estimate is expected in 2020.

With the scoping study being completed, Sukhoi Log is immediately entering the pre-feasibility stage. Results of the pre-feasibility study are expected by the first half of 2020. Results of the feasibility study will be ready by early 2021. The Scoping Study was carried out by Hatch along with the Polyus engineering team and quality assurance and quality control was performed by SRK.