MOSCOW – Russian gold producer Arlan plans to have doubled gold output from its mine in 2020, expecting the price for the precious metal to rise further, the firm's director for development said.
Russia, the world's third largest gold producer, has seen its gold mining expand in recent years with a weakened rouble helping cope with relatively low global gold prices since 2014.
Arlan opened its Pavlik gold mine in Magadan in Russia's far east in 2015 with a $550-million loan from a company affiliated with the Russian state development bank Vnesheconombank, or VEB.
The privately-owned company produced 6.5 t of gold in 2017 and expects to raise that to 6.8 t this year.
Arlan targets a further output increase to 13 t in 2020 and aims to maintain that level for 10 years, Sergei Terentyev, Arlan's director for development, told Reuters in an interview.
To raise output, the firm needed to double the amount of ore it could process to 10-million tonnes a year by 2020 from five million tonnes, he said.
The expansion would cost about $200-million, which the firm aimed to borrow from Russian state banks, Terentyev said, adding that talks could be concluded soon.
He said selling bonds to raise funds was also an option.
Gold prices rose 13% last year, reaching a high of $1 357/oz in early autumn.
"I think we will see gold prices at $1 400 an ounce this year," Terentyev said, adding that he expected the $2 000-mark to be crossed in future. Gold peaked at $1 920 in 2011.
Russia's far eastern Magadan region, also known as Kolyma, is famous for gold deposits, where prisoners of Stalin's Gulag labour camps were forced to work during Soviet times.
The area will host Russia's largest gold mine, Natalka, when its owner Polyus hikes its output by 2019.
Russia produced 193.58 t of gold in the first eight months of 2017, up from 179.73 t in the same period of 2016.