Polymetal International PLC (LSE:POLY) produced the first gold from its Kutyn mine, in Russia’s Far East, ahead of target, although project costs jumped 38%.
“Remote location, severe climate, and unprecedented supply chain disruptions presented major challenges at Kutyn,” said chief executive Vitaly Nesis. “The project team successfully overcame all difficulties to deliver first production six months ahead of the original schedule.”
The speed of the project was ahead of plan, but the cost was also greater than expected. Capital expenditure rose to about US$110mln, an overrun of about US$30mln or 38%, mainly due to the project’s expanded scope, higher fuel prices and COVID-19’s impact on logistics and labour costs.
The Kutyn heap leach facility produced 6,000 ounces.
The London-listed miner said gold production from the mine is expected to reach 40,000 ounces in 2022, with full heap leach processing capacity of 1.3 million tonnes per annum of ore achieved in 2023.
Processing of the refractory ore at the Albazino concentrator will start in 2025. Average annual gold output from 2023 to 2030 will be about 100,000 ounces with an average all-in sustaining cost of production of about US$950 an ounce, it said.
The Kutyn site can be accessed using a winter road from the Albazino mine, about 114 km away, or by sea through the seasonal port of Ulban on the Sea of Okhotsk.