Press Release
PJSC Polyus
PJSC Polyus (MOEX — PLZL) (“Polyus”, or the “Company”), the largest gold producer in Russia, provides an update on the Sukhoi Log auction process. On 26 January 2017, the Russian Federal Agency for Subsoil Use (“Rosnedra”) held an auction for the license for the Sukhoi Log deposit, one of the largest undeveloped gold deposits globally and the biggest gold greenfield in Russia.
According to the information available to the Company, SL Gold Limited Liability Company (“SL Gold”), a company established by JSC Polyus and LLC “RT Business Development” (“RT”), submitted the highest bid during the auction with a total amount of RUB 9.4 billion (of which RUB 8.5 billion was prepaid by SL Gold on 21 December 2016).
The Company expects a formal announcement of the auction results to be released by Rosnedra by the end of February 2017. It may then take up to three months or potentially longer for the Rosnedra to issue the license for Sukhoi Log to SL Gold.
Subject to obtaining the license, the Company intends to conduct additional exploration works and feasibility study, which will last for approximately three to four years, supported by international mining and engineering consultants. Based on the results of that study, the Company will evaluate options to initiate construction activities at Sukhoi Log.
Taking into account the fact that the Sukhoi Log and Verninskoye deposits’ ores have similar mineral and chemical composition, the Company will evaluate the applicability of the processing solutions implemented at Verninskoye to the Sukhoi Log deposit.
Pavel Grachev, Chief Executive Officer of PJSC Polyus, commented:
“We believe that this unique asset perfectly fits Polyus portfolio of large-scale open-pit operations as well as our long-term development strategy. We see multiple synergies with our well-established operating assets — the Irkutsk region is core to Polyus’ operations and Sukhoi Log is located just 20 km away from the Verninskoye deposit. Polyus has extensive alluvial operations via Lenzoloto in the region and has completed building the Peleduy-Mamakan grid, a key component of the power infrastructure supporting the Group’s operations in the Irkutsk region, in 2015.
Polyus is best positioned to take the asset forward in the most disciplined manner and we believe its advancement will enable us to enter the next stage of the Company’s development, enhancing our production growth profile and cementing Polyus position among the global gold majors.”
Sukhoi Log Deposit
The deposit was discovered in 1961 when prospecting and evaluation works were conducted during the Bodaybo expedition, which lasted from 1959 to 1963. According to information provided during the auction process, the deposit’s gold reserves were estimated to be 930.3 mt of ore, grading 2.1 g/t gold for 62.8 moz of contained gold, under the Russian Resource Estimation Standard (“GKZ”).
SL Gold
SL Gold was established by the Company for the purposes of participating in the auction for Sukhoi Log. JSC Polyus, a wholly owned subsidiary of PJSC Polyus holds a 51 per cent participation interest in SL Gold, with the remaining 49 per cent participation interest held by LLC “RT Business Development”, a wholly owned subsidiary of State Corporation Rostec. JSC Polyus will be responsible in the SL Gold for developing and operating the Sukhoi Log deposit, as well as procuring funding for the development of the Sukhoi Log project.
JSC Polyus is entitled to nominate for appointment the CEO of SL Gold and two out of three directors to the board of directors of SL Gold.
JSC Polyus expects to acquire an additional 23.9 per cent stake in SL Gold from RT following the obtaining of the license for a total consideration of approximately USD 141 million , paid in instalments over the next 5 years (with the right to accelerate the acquisition process).
Polyus
Polyus (www.polyus.com) is the largest gold producer in Russia and one of the top 10 gold miners globally by ounces produced. The Company also holds the fourth largest mineral resources base in the world.
Polyus group’s principal operations are located in Krasnoyarsk, Irkutsk and Magadan regions and the Sakha Republic (Yakutia).
In 2015, the Company confirmed its status of one of the lowest-cost gold producers globally.
Enquiries
Investor Contact
Victor Drozdov, Director Investor Relations
+7 (495) 641 33 77 drozdovvi@polyus.com
Media contact
Victoria Vasilyeva, Director Public Relations
+7 (495) 641 33 77 vasilevavs@polyus.com
Forward looking statement
This announcement may contain “forward-looking statements” concerning Polyus and/or Polyus group. Generally, the words “will”, “may”, “should”, “could”, “would”, “can”, “continue”, “opportunity”, “believes”, “expects”, “intends”, “anticipates”, “estimates” or similar expressions identify forward-looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Forward-looking statements include statements relating to future capital expenditures and business and management strategies and the expansion and growth of Polyus’ and/or Polyus group’s operations. Many of these risks and uncertainties relate to factors that are beyond Polyus’ and/or Polyus group’s ability to control or estimate precisely and therefore undue reliance should not be placed on such statements which speak only as at the date of this announcement. Polyus and/or any Polyus group company assumes no obligation in respect of, and does not intend to update, these forward-looking statements, except as required pursuant to applicable law.