Polymetal International plc has completed the Feasibility Study for the Nezhda project based on the updated Ore Reserve estimate reported in accordance with the JORC Code. The Board has approved the start of project construction. “Nezhda is a long-life, high-grade asset with robust economics”, said Vitaly Nesis, Group CEO of Polymetal. “The project is capital light and will rely heavily on our successful experience at Kyzyl. Nezhda will contribute to dividends per share already in 2022.”
Mineral Resources (inclusive of Ore Reserves) comprise 12.4 Moz of gold equivalent (GE) with an average GE grade of 4.5 g/t, a 1.6 Moz increase compared with the previous estimate. The estimate of Proved and Probable Ore Reserves increased by 2.4 Moz of GE and now contains 38 Mt at an average grade of 3.6 g/t GE for 4.4 Moz of GE contained. Open-pit reserves increased by 55% from 2.0 Moz to 3.1 Moz; open-pit reserves now comprise 70% of total reserves.
The FS envisions 25 years of production from 2021 to 2045. The life of mine plan includes 19 years of conventional open-pit mining from 2019 to 2037, and 17 years of production from underground ore from 2029 to 2045.
The updated mine plan envisages five open pits (four at OZ 1 and a separate pit at OZ 56) that will be mined over 19 years via conventional drill-and-blast and truck-shovel methods, with a subsequent gradual switch to underground mining that will last for 17 years. The total expected mine life currently stands at 27 years, and can potentially be increased by another 10 years, following additional exploration to improve the confidence of the remaining Mineral Resources. The projected open-pit mining volumes are currently set at up to 2.2 Mt/y of ore with an average stripping ratio of 9 (excluding pre-strip). The underground mine will utilise long-hole stoping with partially consolidated backfill, a method currently used to good effect by Polymetal at the Albazino underground mine.
The concentrator with a capacity of 1.8 Mt/y incorporates crushing, two-stage grinding, gravity and flotation, concentration. Concentrates are thickened, filtered, dried and bagged for off-site processing. Tails are thickened, filtered, and dry stacked in a fully lined tailings storage facility. Gold recovery to concentrate is anticipated at 85% with a mass pull ratio of 4.8%. An average concentrate grade of 61 g/t is expected.
Flotation concentrates will be sold to third party off-takers while gravity concentrate will be processed at the existing Amursk POX facility. The current feasibility study does not include any consideration of the potential second line at the Amursk POX that would be capable of processing flotation concentrate in-house. Average annual production is expected at 180 Koz during the first full three years of operation and 155,000 oz of payable gold during the first full 15 years of operation.
The FS has also confirmed Nezhda’s low capital intensity and robust project economics: pre-production capital expenditures are estimated at $234 million (including capitalised pre-stripping costs). The project’s IRR is estimated at 29% with NPV of $302 million (using a 10% discount rate, $1,200/oz gold price, RUB/USD exchange rate of 63, and Brent oil price of $67/bbl). Total cash costs (TCC) for the open pit are estimated in the range of $620-670/oz of GE and all-in sustaining cash costs (AISC) in the range of $700-750/oz of GE. Life of mine TCC is expected in the range of $700-750/oz of GE, with AISC in the range of $800-850/oz of GE. First production is planned for Q4 2021 with full ramp-up by Q2 2022.