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Russian gold miners overly reliant on Soviet-era deposits

Over the last 20 years, there has been very little gold exploration in Russia, and as a result, Russian companies are overly reliant on Soviet-era deposits, Polymetal International Plc CEO Vitaly Nesis said Oct. 11 at the MINEX Russia conference in Moscow.

Only 15% of the gold produced in Russia comes from deposits that were discovered in the last 20 years, he said, adding that the Soviet system for exploration was abandoned in 1996.

"If we look at other gold mining [jurisdictions] like Peru and Nevada, which have a long, well-established history of gold mining, a significant percentage of the gold ore that they mine either comes from deposits that were unknown 20 years ago or areas where very little exploration had been done," Nesis said.

According to the executive, many of the gold projects recently brought into development were discovered in Soviet times up to 70 years ago and there have been no real breakthroughs in Russian gold exploration.

Nesis said that while Polymetal has managed to expand its resource base, it did so almost exclusively through acquiring new assets and not through exploration.

With regard to other leaders in the gold mining industry in Russia, Nesis noted that neither PJSC Polyus nor Petropavlovsk Plc had increased their resource base and only Highland Gold Mining Ltd. had managed to boost both its resource base and ore quality.

"I have, on a number of occasions, at this forum been critical of regulators and Rosnedra, and now I think it is time to look at subsoil users themselves and stop complaining about the state," he told conference attendees.

Nesis said Polymetal, over the last two to three years, has overhauled its exploration strategy and plans to spend up to US$60 million on exploration in 2017.