The Board of Polymetal International has approved the expansion of pressure oxidation operations at its operations in Russia and authorised the immediate start of construction at its POX-2 project.

A recently released feasibility study on the project showed that the second POX line would meaningfully increase the value of Polymetal’s refractory reserve base, comprising approximately 55% of total ore reserves, processing concentrates from its Kyzyl, Nezhda, Mayskoye, and Voro mines.

The project is expected to generate significant economic benefits as all refractory concentrates will be retained for in-house processing as opposed to selling to third-party offtakers. It will result in the incremental production of approximately 30,000-35,000 oz/y of gold from the same amount of feedstock and will, on average, lower total cash costs by $ 100-150/oz per ounce for 500,000 oz of annual gold production, according to Polymetal.

POX-2, which is immediately adjacent to the current Amursk POX facility in Amursk, Russia, will also allow Polymetal to create capacity for treatment of third-party refractory concentrates, a market which has grown considerably in Russia and globally in recent years, it said.

The project’s base case post-tax net present value (10% discount) was measured at $112 million and factored in a $1,200/oz gold price, 65 RUB/$ exchange rate and a total of 4.3 Mt of concentrate containing 9.3 Moz of gold processed from Kyzyl, Nezhda, Mayskoye, and Voro over a period of 23 years.

Pre-production capital expenditures were estimated at $431 million and would be entirely funded out of company’s operating cash flows, Polymetal said.

The plant’s design throughput capacity would be 250,000-300,000 t/y of concentrate, depending on the levels of sulphur content. The maximum sulphide sulphur processing capacity, meanwhile, was 48,000 t/y.

“This would complement the 200,000 t/y of concentrate and 30,000 t/y of sulphur capacity of the existing Amursk POX facility,” Polymetal said, adding that the new facility would use a titanium-lined steel autoclave operating at 240˚С and a pressure of 43 bar.

Hatch Inc will be responsible for the basic engineering, detailed engineering, POX procurement support and the supply of custom-made equipment for high-pressure and acidic processing areas, according to Polymetal. Polymetal Engineering is responsible for other processing areas, general site layout, and infrastructure.

Vitaly Nesis, Group CEO of Polymetal, said: “POX-2 leverages our core technical capabilities and creates substantial value. It also fully de-risks our business model by eliminating dependence on concentrate offtake markets. Emerging trends in the global gold mining industry make POX-2 a crucial element of the company’s long-term strategy”.

Polymetal envisages the start of detailed engineering and construction in the June quarter, receipt of all permits in the March quarter of 2020, delivery of the autoclave on-site in the September quarter of that year and completion of civil construction works around a year later.

Completion of the main equipment installation is scheduled for the March quarter of 2022, followed by completion of external infrastructure and mechanical completion and start of commissioning activities in the September and December quarters of that year, respectively.

The end of commissioning and first production could take place in the September quarter of 2023, with full ramp-up by the end of that year.

POX-2 will share some of the external infrastructure (gas main, access road, water main) with the existing POX facility. Additional electricity supply will be provided via a new dedicated power line from the regional 110 kW grid, Polymetal said.

The project will include a new hydrometallurgical area (POX proper), carbon-in-leach and intensive cyanidation areas, an oxygen plant, an upgrade to the existing dry tailings facility, reverse osmosis water treatment facility, and several smaller infrastructural facilities (warehouses, maintenance areas, etc).

POX-2 is designed for processing double refractory concentrates, which contain micron gold particles encapsulated in sulphides (pyrites and arsenic pyrites) together with high concentrations of organic carbon. “High carbon content drives high sorption activity (preg-robbing) and dictates the use of high-temperature (240˚С) pressure oxidation compared with medium-temperature (200˚С) oxidation utilized at the existing Amursk POX facility,” Polymetal said.

“Pressure oxidation was selected as the most feasible processing technology for double refractory ores. It is able to achieve gold recoveries of 96% by utilising high temperatures, elevated pressure and oxygen to recover encapsulated gold, while conventional cyanidation methods would result in sub-optimal recovery rates of 20-40%. Completed metallurgical tests on Kyzyl and Mayskoye high-carbon concentrates confirm the recovery rate of 96%.”

Polymetal’s Amursk POX facility, in 2018, produced 308,000 oz of gold-equivalent from 170,000 t of processed concentrate for a 96.7% POX recovery.