China National Gold’s US$420mln investment in the development of the Klyuchevskoye gold deposit in Russia has an interesting read-across for Orsu Metals Corp (CVE:OSU), which has the neighbouring Sergeevskoe gold project.
Orsu is currently drilling at Sergeevskoe and all the signs are that it could be sitting on a resource amounting to up to 2.5mln ounces.
READ: Orsu Metals well set to prove up to 2.5mln ounces of gold at Sergeevskoe and PEA due by the end of the year
If so, the project could become of real interest to China National Gold, and to its Indian partner SUN, which is putting up an additional US$65mln for the development of Klyuchevskoye.
Current thinking is that the Chinese will look to establish a 300,000 ounce per year operation at Klyuchevskoye, and that although there is ore to support that sort of operation at the moment, at some point China National Gold and SUN are likely to want more.
That’s where Orsu could enter the picture.
Orsu’s Sergeevskoe project runs right up to the boundary of Klyuchevskoye, and with work on a preliminary economic assessment well underway, the economic potential will shortly be on view for all to see. The economies of scale that would be on offer are likely to be quite significant, and would save Orsu developing a standalone operation.
It's still hypothetical at this stage, of course, and Orsu will continue to work towards developing its own mine independently. But it doesn't do any harm to know a cash-rich mining giant with acquisitive tendencies is sitting just across the tenement border.
China National Gold is one of the largest gold mining companies in the world, with operations stretching across Africa and Asia, and has a representative on the board of the World Gold Council.