Russian Polymetal to invest $640 million into Kazakhstani Kyzyl gold mine

Russian gold mining company Polymetal plans to invest up to $640 million into Kazakhstani gold mine Kyzyl, Tengrinews reports citing Kommersant.

The company has decided to suspend most of its mines in Russia and focus on developing the Kyzyl project.

The main shareholders of Polymetal, Petr Kellner of PPF Group, Alexander Nesis of ICT Group and businessman Alexander Mamut announced that the company would focus on the development of Kyzyl in Kazakhstan, while other projects in Russia will be suspended till 2018.

According to trade experts, the decision seems viable, although technically difficult as former owners of the gold deposit Kyzyl could not continue mining due to difficulties with refractory ore.

Vitalyi Nesis of Polymental said that the company would focus its resources on low cost projects with low risk and high promise. Polymetal was earlier reported to consider buying Altynalmas Gold Ltd that owns Kyzyl for $618.5 million. The purchase could be finalized by the end of 2014.

Kazakhstani businessman Timur Kulibayev is reported to be the beneficiary of Altynalmas. Kyzyl gold deposit consists of Bakyrchik (6.7 million ounce of gold) and Bolshevik (0.8 million ounce of gold) mine.

The gold deposit is estimated to bring Polymetal up to 19.7 million ounce of gold. This would allow the company to increase its gold sales by 80%. Estimated investments into Kyzyl are $440-640 million in 2015 and 2018. The production is scheduled to commence in 2018.

Last year, Polymetal was reported to purchase Bakyrchik gold mine, a part of Kyzyl deposit, for $500 million. Bakyrchik is estimated to contain 5.76 million ounce of gold. Its content in the ore is fairly high – 8 grams per 1 ton of ore.

By Gyuzel Kamalova