Russian mining group Polymetal will start construction of the Nezhda mine in March next year, the company said on Thursday, after it announced the completion of the acquisition of the remaining 82.3% stake in the property from Ivan Kulakov for $185-million.
The Nezdha mine, which the London-listed company’s board approved earlier this month, would cost $234-million to build and would produce 180 000 oz/y for the first three years of its 25 year life and thereafter 155 000 oz/y.
"This transaction enables us to start mining at Nezhda immediately and begin construction in March 2019. We expect to deliver first production in 2021 with a full-ramp up in 2022", affirmed Polymetal CEO Vitaly Nesis.
Nezhda project has a net present value of $302-million at a $1 200/oz gold price and a 10% discount rate, with the internal rate of return estimated to be 29%.
The property has a gold-equivalent (GE) mineral resource of 12.4-million ounces with an average GE grade of 4.5 g/t. The ore reserves comprise 38-million tonnes at an average grade of 3.6 g/t GE for 4.4-million ounces of GE contained.
Nezhda is Russia's fourth-largest gold deposit.
Polymetal first entered into the joint venture for the property in 2015, acquiring a 15.3% stake in the South-Verkhoyansk Mining Company, which owns the mining and exploration license for the property. In July 2017, the company has agreed to increase its stake to 24.7% with a call option to buy out the remaining 75.3% in 2018, subject to certain conditions.