By Vladislav Vorotnikov

White Gold, a joint venture of the Russian state corporation Rostec and Seligdar, polymetallic holding, has won the competitive bidding procedure to develop Kyuchys gold deposit in the Sakha Republic, Russia, for 7.7 billion rubles ($110 million).

Kyuchys is the last undeveloped gold deposit in Russia with reserves above 100 metric tons (mt), the Russian Union of Gold Producers said.

The Kyuchus field located near Tiksi on the Laptev Sea coast in the Arctic is believed to hold balance reserves of more than 175 mt of gold, while its resource potential exceeds 250 mt. This is an unpopulated part of the country with poorly developed infrastructure.

During a follow-up press conference, Alexander Kozlov, natural resources minister of Sakha Republic that under the contract terms, White Gold is obliged to build a 35-megawatt (MW) small modular nuclear plant to ensure a sustainable electricity supply to the mine.

Another mandatory condition is that White Gold must ensure the annual gold production of at least 10 mt from the moment it reaches its design capacity.

Sergei Kashuba, chairman of the Russian Union of Gold Producers of the Russian Federation, told the Russian newspaper Kommersant that challenges to develop refractory ores at the deposit and the absence of infrastructure are expected to make the Kyuchus project expensive and secure low profitability.

“If we talk about complexity, the Kyuchus ores are not just refractory, but thrice refractory,” he said. “Gold is found in sulfides. In addition, there is a carbon component in the ores, which creates difficulties at the processing stage. Finally, there are contaminants in the form of arsenic and mercury.”

Kashuba added that he hoped that all the difficulties would be justified by the high grade of gold in the ore, standing at 7 grams per mt. Under the most optimistic scenario, the production at the deposit is expected to begin in 2027, but 2030 seems to be a more realistic target.

With the global gold prices standing at $1,400 in the coming years, and the capital costs ranging between $1.2 billion and $1.5 billion, the internal rate of return is projected to amount to 12%, compared to 35%-40% on average in the Russian gold mining industry, Kashuba said, adding that some logistics issues are also anticipated since ore processing capacities cannot be built at the mine.

Russia is expected to increase gold production by 1% to 2% per year in the coming decade, to become the world’s largest gold produce by 2025, the Russian Union of Gold Producers forecast. In 2020, the production stood at 330 mt. In addition to Kyuchus, gold mining is set to begin at several new deposits in the coming years, including Sukhoi Log, Veduga and Nezhdaninsoye.

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