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Trans-Siberian Gold secures 2nd year of reduced-cost power for Asacha mine

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Trans-Siberian Gold secures 2nd year of reduced-cost power for Asacha mine

Trans-Siberian Gold PLC's Asacha mine on Russia's Far Eastern Kamchatka Peninsula will continue to receive discounted electricity in 2020 following an agreement with the peninsula's main power provider.

State-owned PJSC Kamchatskenergo will supply the underground mine with electricity at a reduced price of 4.75 Russian rubles per kilowatt-hour in 2020, according to a Jan. 3 news release.

Trans-Siberian said it realized "significant" cost savings from its 2019 power deal with a reduced rate of 4.69 rubles per kWh, made possible by a Russian government initiative designed to encourage investment and support economic growth in the country's sparsely populated Far East.

"Lower energy costs materially reduce the financial burden for companies operating in the Far East of Russia," CEO Alexander Dorogov said in the statement.

The company reported a 24.6% year-over-year drop in total cash costs to US$672 per ounce of gold in its interim 2019 results while pretax profit shot up more than twofold to US$8.5 million.

Trans-Siberian recently signed an agreement with Russia's Far East Development Corp. confirming its inclusion in the Kamchatka Advanced Special Economic Zone, part of a program established by the Russian government in 2014 to provide preferential business terms to organizations operating in the region.

The company's inclusion in the Advanced Special Economic Zone could contribute to cost savings of about US$6 million over the next seven years through lower taxes and royalties, Trans-Siberian said Dec. 16, 2019.

It plans to invest as much as US$21.2 million until 2024, expected to result in the creation of about 68 jobs in the region.

Among a number of investments, Trans-Siberian plans to extend Asacha's eastern zone with the development of Vein 25, with preliminary work underway. The company will also invest in ventilation and more mining equipment.

Asacha produced 12,620 ounces of gold in the third quarter of 2019 and 34,509 ounces over the first nine months of 2019, increasing by 32% and 19%, respectively, year over year.

Trans-Siberian shares were trading up 6.0% at 88 pence apiece by early afternoon in London.

As of Jan. 2, US$1 was equivalent to 61.72 Russian rubles.