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Polymetal Board approves Veduga gold construction

Published by
Global Mining Review,


The Board of Polymetal has approved a US$447 million investment in the 4 million oz asset, based on the results of the preliminary feasibility study (PFS). First production is expected in 2Q25.

“The large high-grade reserve base, robust economics, and clear execution path to significant cash flows underpinned the Board’s decision to approve Veduga,” said Vitaly Nesis, Group CEO of Polymetal. “The management is currently planning a full consolidation of the asset in 1H22.”

The updated ore reserve estimate as at 1 February 2021 comprises 31.9 million t of ore with an average gold grade of 3.9 g/t containing 4 million oz of gold. This is a 50% or 1.3 million oz increase compared to the previous estimate. Opencast reserves increased by 89% to 1.4 million oz and now represent 35% of the total ore reserves, whilst underground reserves extended by 35% to 2.6 million oz. Mineral resources additional to ore reserves stand at 8.7 million t of ore with an average grade of 4.5 g/t containing 1.3 million oz of gold representing an opportunity for significant conversion into reserves.

The mine plan assumes 10 years of conventional opencast mining until 2031 (including pre-production stripping in 2022 – 2024), and 12 years of underground mining using a skip shaft for hauling from 2030 – 2041.

The PFS is based on a 2 million tpa flotation concentrator with dry-stacking of tailings. Flowsheet development has been supported by extensive external and in-house metallurgical testing. Flotation concentrate will be processed at the future POX-2, while volumes in excess of the facility’s capacity will be sold to third parties. Veduga could also potentially become a source of feed for the future Pacific POX project.

Average life of mine annual production is 200 000 oz of gold at TCC in the range of US$725 – US$775/oz and AISC in the range of US$800 – US$850/oz.

First production is planned for 2Q25 with full ramp-up by the end of 3Q25.

The project will materially contribute to Polymetal’s carbon emission reduction targets. The mine will rely on hydro power ensuring relatively low emission intensity level of 405 kg carbon dioxide equivalent (CO2e)/oz GE in 2025-2030 on average (well below the group’s target of 560 kg CO2e/oz GE by 2030).

Total project CAPEX is estimated at US$447 million (including capitalised pre-stripping costs) and includes a post-launch skip shaft and underground infrastructure construction of US$77 million in 2027 – 2029. The extended opencast allows to shift underground development capital costs beyond the start-up CAPEX.

The project’s IRR is estimated at 19% with NPV of US$292 million (using a 10% discount rate, US$1500/oz gold price, RUB/USD exchange rate of 72).

Veduga has obtained the status of a Regional Investment Project, so should benefit from reduced income tax for the project in 2025 – 2028 and reduced Mineral Extraction Tax until 2034.

Polymetal currently owns 59.4% stake in Veduga and holds a call option to increase its stake to 100% at a pre-determined price giving VTB a fixed rate of return on initial investment. Following the final statutory clearance which is expected in 2Q22, Polymetal plans to fully consolidate the asset.

Read the article online at: https://www.globalminingreview.com/exploration-development/09112021/polymetal-board-approves-veduga-gold-construction/

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Russian mining news Gold mining news Opencast mine news