PJSC Polyus on Jan. 26 said 51%-owned SL Gold LLC, a joint venture between the gold miner's unit JSC Polyus and a subsidiary of state-run Rostec, won the Russian government auction for the rights to develop the greenfield Sukhoi Log gold deposit in the country.
The joint venture submitted a bid of 9.4 billion Russian rubles, which includes the initial 8.5 billion-ruble payment made in December 2016.
The company expects that the formal auction results will be released by February-end, and it will then take up to three months, or more, for the company to be granted a license for Sukhoi Log.
Upon obtaining the license, the company intends to conduct exploration and feasibility studies on the deposit, and results will determine the path taken toward construction activities. Considering that Sukhoi Log is 20 kilometers away from Polyus' Verninskoye deposit, CEO Pavel Grachev sees the potential for multiple synergies.
Both deposits have a similar mineral and chemical composition, and the company will evaluate applying Verninskoye processing solutions at Sukhoi Log.
Under the Russian Resource Estimation Standard, the deposit hosts gold reserves of 930.3 million tonnes grading 2.1 g/t of gold for 62.8 million ounces of contained gold.
A recent Reuters report said the Russian government was selling Sukhoi Log at a discount to SL Gold by implementing barriers to make the asset unattractive to foreign bidders.
After the license is obtained, JSC Polyus expects to acquire an additional 23.9% stake in SL Gold from Rostec for US$141 million, to be paid in installments over the next five years.
As of Jan. 25, US$1 was equivalent to 59.89 Russian rubles.