Polyus PJSC, Russia’s largest gold producer, said its untapped Sukhoi Log deposit in Siberia holds the world’s biggest reserves.
An audit showed Sukhoi Log has 40 million ounces of proven reserves as measured by international JORC standards, with an average gold content of 2.3 grams per ton, Chief Executive Officer Pavel Grachev said. That means the field—accounting for more than a quarter of Russian gold reserves—is bigger than Seabridge Gold Inc.’s KSM Project in Canada and Donlin Gold in Alaska.
“The estimate of the reserves is an important milestone in development of the field,” Grachev said in an interview in Moscow.
Sukhoi Log, located in the isolated Irkutsk region of Siberia, was discovered by Soviet geologists in 1961 and studied in the 1970s. The government had long considered offloading the deposit, and in 2017 sold the field in an auction to Polyus and a state partner, which the mining company later bought out.
Polyus said earlier this year that it would focus on smaller projects and reducing its debt ratio in the coming years before developing the field. The company plans to announce details on expected production and investment at Sukhoi Log once a pre-feasibility study is ready by year-end. It previously said that costs could reach $2.5 billion, with annual output totaling about 1.6 million ounces.
While developing giant deposits is typically a lengthy and costly process, the field may allow Polyus to boost annual output by at least 70%. Gold prices have rallied about 60% since the company purchased it, and reached a record in August as vast amounts of stimulus were pumped into economies to curb the damage from the coronavirus pandemic.
“We want to show that a project of this quality and scale can and should be carried out, taking into account the best environmental standards, despite the hard-to-reach location,” Grachev said.
More on Sukhoi Log:
- The audit shows that as well as economically mineable reserves, the deposit has 67 million ounces of total resources, up from 63 million ounces previously estimated.
- That figure may rise after more drilling and studies.
- Main investment is due to start in 2023. Polyus has already started spending on infrastructure for the project. There is also a plan on co-investing with the government on the reconstruction of a local airport.
More must-read international coverage from Fortune:
- China’s GDP growth in Q3 offers little for other economies to emulate
- Big Chocolate’s child-labor problem is still far from fixed
- Impossible Foods enters grocery stores outside the U.S. for the first time
- Hong Kong has COVID-19 under control—it hasn’t helped its flagship airline
- U.K. drug trial will deliberately expose young people to the coronavirus, despite ethical concerns