First concentrate is expected from the Kyzyl mine on August 1.
JOHANNESBURG (miningweekly.com) – Construction activities at the new Kyzyl mine, which LSE-listed Polymetal is building in Kazakhstan, are slightly ahead of schedule, with commissioning brought forward by a couple of weeks.
Dry commissioning of the processing plant would start on June 1, followed by first concentrate production on August 1, the gold miner said on Wednesday in its first-quarter production results announcement.
The company previously said commissioning of the 300 000 oz/y Kyzyl mine would start in July and that first concentrate was expected in mid-August.
First ore was mined from the openpit in January, ahead of schedule. A total of 74 000 t of ore had been mined by the end of March.
Polymetal reported that most of the key equipment and infrastructure were finalised during the March quarter, including the concentrator equipment, the crusher unit, as well as the assay lab. The tailings storage facility successfully passed hydraulic testing.
The miner said that construction was now focused on finalising electrical wiring, ventilation ducting, and the installation of process control equipment.
With a 12-month concentrate offtake contract in place, Polymetal said the Kyzyl mine would start generating free cash flow “almost immediately” after the start of concentrate production.
“The successful launch of Kyzyl will demonstrate Polymetal's ability to successfully deliver on new projects while continuing to efficiently run our existing operations,” CEO Vitaly Nesis said in a statement.
Meanwhile, Nesis reported a “steady start” to 2018, with stable production results at all the company’s mines.
Polymetal produced 295 000 oz of gold equivalent in the first quarter of 2018, a 5% year-on-year increase, with strong performances at Albazino, and Svetloye, in Russia’s Khabarovsk region, as well as Varvara, in Kazakhstan, compensating for the grade-driven decline at Omolon, in Russia’s Magadan region.
Gold production for the quarter increased 8% over the previous year to 214 000 oz, while silver production decreased by 3% to six-million ounces.
First-quarter revenues increased 19% year-on-year to $354-million, driven by volume growth, higher commodity prices, and lesser impact from seasonal refinery closure. Silver sales traditionally lagged production owing to the seasonal increase in concentrate inventories. This working capital build-up is expected to reverse by year-end, whereas gold sales volumes were largely in line with production.
Polymetal stated that it was on track to produce 1.55-million ounces of gold equivalent in 2018.
Polymetal signed the concentrate offtake contract for the first 12 months of production with one of its established trading partners. This will ensure free cash flow generation almost immediately after the start of concentrate production.