The Board of Polymetal has approved a $447 million investment in the Veduga gold project in the Krasnoyarsk Region of Russia based on the results of a recent prefeasibility study (PFS).
Veduga was discovered in 1977 and extensively explored between 1988 and 1996. Polymetal has been a partial owner of the property since 2006 with the original 50% stake acquired through the joint venture with AngloGold Ashanti. In this time, the mining of oxide ore has started, an initial NI-compliant reserve and resources estimate was prepared and open-pit mining of sulphide ore kicked off.
The latest investment will see Polymetal target 10 years of conventional open-pit mining of five open pits until 2031 (including pre-production stripping in 2022-2024), and 12 years of underground mining using a skip shaft for hauling from 2030 to 2041. First production is expected in the June quarter of 2025. This is based off a 4 Moz reserve base grading 3.9 g/t Au.
The prefeasibility study was based on a 2 Mt/y flotation concentrator with dry stacking of tailings. This would see flotation concentrate processed at the future POX-2, while volumes in excess of the facility’s capacity will be sold to third parties.
Veduga could also potentially become a source of feed for the future Pacific POX project, Polymetal said, adding that flowsheet development has been supported by extensive external and in-house metallurgical testing.
Average life of mine annual production is estimated at 200,000 oz of gold at all-in sustaining costs of $800-850/oz.
The project is expected to materially contribute to Polymetal’s carbon emission reduction targets, relying on hydro power to ensure relatively low emission intensity level of 405 kg CO2e/oz gold equivalent in 2025-2030 on average. This is well below the group’s target of 560 kg CO2e/oz of gold equivalent by 2030, it said.
Of the $447 million capital expenditure (inclusive of capitalised pre-stripping costs), $77 million is dedicated to a “post-launch” skip shaft and underground infrastructure construction in 2027-2029. Polymetal said further studies will be undertaken to evaluate alternative ore transportation options that could reduce the capital spending. It also said it plans to use exclusively battery-electric vehicles throughout the underground mine.
The extended open pit allows to shift underground development capital costs beyond the start-up capital expenditure, Polymetal added.
Polymetal currently owns a 59.4% stake in Veduga and holds a call option to increase its stake to 100% at a pre-determined price giving VTB Bank a fixed rate of return on initial investment. Following the final statutory clearance – expected in the June quarter of 2022 – Polymetal plans to fully consolidate the asset.