The board of Russian gold miner Polymetal has approved a new $234-million gold mine, which is set to enter into production in the final quarter of 2021.

Announcing the outcomes of a feasibility study and board approval for the Nezhda project, Polymetal said on Monday that the mine would operate for 25 years, producing 180 000 oz/y in the first three years of operation and 155 000 oz/y during the first full 15 years of operations.

The feasibility study includes 19 years of conventional openpit mining from 2019 to 2037, and 17 years of production from underground ore from 2029 to 2045. The study is based on a conventional 1.8-million-tonne-a-year flotation concentrator with gravity concentration circuit.

Total cash costs for the openpit are estimated in the range of $620/oz to $670/oz gold equivalent (GE) and an all-in sustaining cash cost (AISC) of $700/oz to $750/oz. The life-of-mine total cash cost is in the range of $700/oz to $750/oz GE, with an AISC of $800/oz to $850/oz of GE.

The project’s internal rate of return is estimated at 29% with a net present value of $302-million, using a 10% discount rate.

"Nezhda is a long-life, high-grade asset with robust economics," said CEO Vitaly Nesis.

"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."

Polymetal started production at the Kyzyl mine, in Kazakhstan, a month early and finished the project about 3% below its budget.

Meanwhile, the company announced a new mineral resources estimate for Nezhda, comprising 12.4-million ounces of GE, with an average grade of 4.5 g/t, a 1.6-million-ounce increase compared with the previous estimate.

The estimate of proved and probable ore reserves increased by 2.4-million ounce of GE and now contains 38-million tonnes at an average grade of 3.6 g/t GE for 4.4-million ounces of GE contained.

Openpit reserves increased by 55% from 2-million ounces to 3.1-million ounces. Openpit reserves now comprise 70% of total reserves.

The Nezhda gold deposit was discovered in 1951 during the Allakh-Yunskaya geological exploration expedition. From 1959, the deposit was subject to several exploration and evaluation initiatives resulting in newly identified ore zones. In 1975, a 180 000 oz/y underground mine and concentrator was commissioned, with more than two-million tonnes of ore mined and processed before the operation was placed on care and maintenance in 2005.

Polyus acquired the asset in 2006, subsequently undertaking an extensive exploration programme and completing several technical studies. Polymetal entered into the project by establishing a joint venture with Polyus for the Nezhda gold deposit in 2015, completing a total 42 479 m of diamond drilling by 2017. Polymetal in April announced it would buy out a 75.3% interest in Nezhda from Pallavicino for $144-million.

Nezhda is the fourth largest gold deposit in Russia.