From October 6 to 8, 2015, the 11th Mining Forum MINEX Russia 2015 was held in Moscow at the Radisson Slavyanskaya Hotel. The organizers chose “Advanced development - prospects and opportunities” as the motto of this year’s forum. Once again, the event brought together over 500 leaders and experts from Russian and international companies to discuss trends and prospects in mining industry. The professional community noted that against the backdrop of global uncertainty, the development vectors of the Russian economy and, in particular, the mining sector should be rethought and a fundamentally new model of economic growth should be formed, aimed at rapid development and realization of the country’s internal potential.And the staff of our magazine talked with the forum participants.
In addition to Pavlik, Arlan owns the Rodionovskoye, Burkhalinskoye, Shakhskoye and Utinskoye fields in the region, what are their resources and reserves? What are the plans for their development? It looks like Rodionovskoye will be the first to go into business?
IN this moment The company has focused its efforts on achieving production capacity at the Pavlik mining and processing plant and plans to continue its further development. Development of the Rodionovskoye deposit is also planned in the near future. These deposits are located close to each other, and in conditions where the infrastructure has already been created at the Pavlik mining and processing complex, the Rodionovskoye deposit will be much easier to develop. We plan to develop the remaining deposits on a targeted basis, depending on the prevailing conditions. In particular, as an option, we can install equipment at the Utinskoye field, which is relatively small in terms of reserves (10 tons), but easily accessible. In the future, we also plan to engage in geological exploration at the Burkhalinskoye and Shakhskoye fields.
At one time you had problems with a lack of electricity. A new line of power transmission line "Ust-Omchug" - "Omchak" with a length of 270 km and a substation with a capacity of 250 megavolt-amperes was needed. How was this problem solved?
Today, Pavlik is 100% supplied with electricity. To double the production capacity of the plant, we need about 20 more MW of power, and this does not take into account the development of the Rodionovskoye field. To resolve all issues with energy supply, a decision has now been made within the framework of state program build a new branch of the 220 volt line “Ust-Omchug-Omchak”. This project was approved by a government commission headed by Yuri Trutnev to allocate funds from the federal budget, approximately 9 billion rubles, for the construction of this line. However, even without the construction of this line, we could be allocated these 20 MW and we will actively negotiate to provide us with this power now, without waiting for the moment when the line is built.
In 2014, the Canadian Centerra Gold became interested in Pavlik and other Arlan assets in the Magadan region; What did this interest lead to?
The last time we communicated with Centerra Gold was in 2010, when there was no talk about Pavlik. We didn't agree on anything and didn't interact later.
What is the meaning of your cooperation with VEB-Leasing and what are its current results for both of your parties?
Leasing is a form of lending and nothing more. If we had used it at an earlier stage, when there was nothing, it would have been very interesting. And now, when the enterprise is already operating, producing metal, it is not so important what kind of loan was used. At the same time, VEB is participating in the project, we are actively cooperating, and we hope to cooperate in the future.
Recently, in September, at the Eastern Economic Forum, the largest project presented by Kolyma was the development of rich deposits of the Yana-Kolyma gold province and the construction of a mining and metallurgical complex based on the Pavlik, Pavlik-2 and Rodionovskoye deposits. It is expected that the total amount of required investment in the project will exceed $800 million.
Pavlik deposit.
Can you somehow characterize the sources of these investments? What is the time frame for investing such funds and when, in your opinion, will these investments pay off? In 2025? 2050?
Undoubtedly, we will attract money in the future. They will be used primarily for the improvement and development of Rodionovskoye, since the costs of expanding Pavlik are significantly lower than the initial costs when the mining and processing plant was just being built. Even with the expansion of Pavlik, the costs will still be small, since there is housing and infrastructure. It is beneficial for banks to cooperate with Arlan, since we back our loans with gold.
Over the past few months, we have been actively negotiating with banks to expand financing.
Do you have any interests or even plans to operate your company in other regions of Russia, in neighboring countries or abroad? Does ARLAN show interest in any other types of minerals and how does this combine with interest in gold exploration and mining?
As for the Russian regions, we looked at several projects, but decided to stay where we are working now. Work in a new region involves organizational, transport and management problems, which require their decision. And in Kolyma, where we are now working, everything is already set up.
As for the purely technical side of the matter, the company does not plan to engage in other mineral resources. Our priority is gold mining. We don’t see much point in organizing technological chains for the extraction of other minerals.
However, Arlan not only builds enterprises, we are also an investment company that purchases shares in existing or newly constructed enterprises. And, in this capacity, we regularly analyze many projects in the near and far abroad.
In particular, we are very interested in African assets; there are several projects in which we could invest. We are carrying out this work, not as actively as in the Magadan region, but we see great prospects in this.
The Pavlik deposit is located in the Tenkinsky district of the Magadan region, in the basin of the lower reaches of the stream of the same name, named after the son of Soviet geologist Dmitry Aseev. The deposit is part of the Omchak ore and placer cluster, located on the territory of the Yana-Kolyma gold province. Pavlik's mineral resource base amounts to more than 240 tons of gold.
The method of development is open. Ore beneficiation is carried out using traditional gold extraction technology: gravity, flotation and sorption leaching. The end-to-end gold recovery is more than 80%. Electricity is provided through the capacities of the Kolyma State District Power Plant.
In August 2015, the official launch of the first stage of the mining and processing plant took place. Commissioning work was completed in January 2016. Almost 5 tons of gold were produced in 2015-16.
In 2017, the Pavlik mining and processing plant reached its design capacity of 5 million tons of ore per year and increased gold production to 6.5 tons. At the end of 2017, PAVLIK took 9th place in the ranking of leading gold mining companies in Russia.
In 2018, it is planned to produce 7 tons of gold at the Pavlik deposit.
How are the Magadan Pavlik gold deposit and the Uzbek Muruntau similar, why it is impossible to determine exactly how many years Pavlik’s rich ore will last, when the company will begin preparations for an IPO, and who can become its M&A partner, he spoke about this in an interview with Vestnik Zolotopromyshlennika CEO JSC "ZRK Pavlik" Vasily Makarov
Question: Vasily Pavlovich, are you satisfied with the results of 2017? Have all tasks been completed, have all goals been achieved?
— We are pleased with the results of the year, especially since 2017 is a significant year for Pavlik, and for me personally. In December, it was 10 years since the first drilling wells confirmed the industrial significance of the Pavlik deposit, and the same year marked 10 years since I joined this company.
Also in December 2017, we produced a total of more than 11 tons of gold: in 2015 we produced the first ton of gold, in 2016 we already had 3.8 tons, and in 2017 - 6.5 tons, and now we are at ninth place in the ranking Russian manufacturers gold - in the top ten.
Question: You have already entered the full production cycle, can you tell me what your production cost is? What is the expected profit for 2017? How big is the debt load?
— Yes, the factory on Pavlik has already reached its production capacity for processing 5 million tons of ore. Our cost is approximately the same as the industry average in Russia.
I would not like to use exact figures, since we are a private company, and we are now in a certain negotiation process with creditors to finance the expansion of production. We will publish everything later.
We have a debt load and we would like to extend the repayment period or reduce it. Of course, it’s not easy for us, but nevertheless we are coping, and we don’t have any serious problems.
Question: How did the year start, what are your plans?
— At the end of January, we produced 550 kg, and in February, we can already say, about 500 kg of gold. In 2017, we had a slight decline in production in January and February due to various reasons and weather conditions - these are the coldest months. This year we passed them well, took into account the experience of the previous year, and drew some conclusions.
It will be possible to correctly compare the dynamics for the second quarter, but for the year as a whole we should reach 7 tons of gold, as we stated earlier. In 2017 we produced 6.5 tons, in 2018-2019 there will be 7 tons. This growth is planned without a significant expansion of the mining and processing plant's production capacity - due to better organization of labor and optimization of production processes.
First of all, in 2018 we will expand the mineral resource base - we will increase the reserves of the Pavlik deposit by approximately 100 tons, and we will already have approximately 250 tons of them in categories C1 + C2, and approximately 50 tons of resources in P1 (flanks and underlying horizons). Now on Pavlik there are 150 tons of reserves (C1+C2) and 62 tons of resources according to P1, but these resources have already become reserves, and we will protect new ones. With all this, we clearly see that on Pavlik we have not left the ore, and industrial maintenance continues on the flanks.
We are currently planning to expand production. If now the mining and processing plant can process up to 5.5 million tons of ore, then in 2020 it is planned to process 10 million tons of ore and produce 12-13 tons of gold.
Question: The media reported that the construction of the plant was financed by VEB-Leasing for 21 billion rubles from Vnesheconombank funds. Who are you negotiating with this time, and how much money do you need for expansion?
— I wouldn’t like to talk about it, except that we haven’t changed our financial partners, and we still have one.
And for expansion we need significantly less funds than at the very beginning. The factory will be the same, we will just add equipment, mainly crushing, mills - we will double the processing capacity, and there will be a significant increase in production.
Question: How many years will Pavlik’s rich ore last?
— If we talk about the annual processing of 10 million tons of ore from 2020, then 20 years will definitely be enough. But in general, from a geological point of view, the reserves that currently exist are only part of the reserves that we see in the contours of the designed open pit - in reality, the ore extends far beyond the contours of the designed open pit and is not limited to them. The reserves we are talking about, which we put on the state balance sheet, are only the studied part of the deposit, but we have data that the ore body continues to depth and dips to the southeast. As mining progresses, the quarry will deepen, its sides will be torn apart, and production will continue accordingly.
Therefore, when asked about the time frame, we can say that it will be enough for 50 years, that is, a very long time. I can give an example of the development of the Muruntau deposit in Uzbekistan, where preparations are now underway for the development of the fifth stage of the deposit, production is already going on at a depth of almost a kilometer, and our quarry is not yet deep at all. Of course, we are not on the same scale as Muruntau, but this is also a stockwork, which also goes deep.
Question: What is the current state of work on Rodionovsky, what are your plans for 2018?
— This year, in May-June, we will confirm the reserves at Rodionovsky - there will be a feasibility study of temporary conditions. And we will begin preparing a project for its development. There are several options for its development: one option is preliminary enrichment on site, and then transporting the concentrate for processing at the Pavlik factory, or installing your own gravity extraction complex. That is, I don’t think there will be a need for such a new expensive plant there.
Question: What are the prospects for starting production at Rodionovskoye?
— If everything goes well now and we start working on the development project, then by 2020 we will get our first gold. This is where the question is still open, and depending on which option is chosen, there will be corresponding production volumes. Now we will do a feasibility study, with technology... it will be clear.
Question: What kind of ores are there at Rodionovskoye?
— At Rodionovskoe, the ores are characterized by higher gold contents compared to Pavlik, and the boundaries of the ores are more sharply defined, in contrast to the stockwork at Pavlik.
Question: Is it far to transport the concentrate to Pavlik?
— The distance there is 55 km, and these are hills; transportation is quite difficult, so it may be that construction on site will be cheaper than building a corresponding road. There is another idea - to build a purely gravity factory at Rodionovsky, which also does not require any large expenses. If in the feasibility study we now see that in gravity the percentage of gold yield is quite high, then we will decide.
I prefer the option of pre-enriching the ore on site, and then transporting small volumes to Pavlik for extraction.
Question: Is there enough energy to expand capacity?
“We have enough energy to double the capacity of the Pavlik factory.” And for the future, you know, now the Matrosov Mine (Polyus) is building a power line-220, it runs very close to the Rodionovskoye deposit. Initially, it was conceived and is being built for the development of the Yana-Kolyma gold-bearing province; when it arrives there, there will be plenty of electricity.
— Regarding the mineral resource base, I can say the following: Pavlik can reach a processing capacity of 15 million and even 20 million tons of ore (20-25 tons of gold).
The mineral resource base allows, there is potential for development, we do not stop - we are constantly conducting geological exploration for expansion, and it is bearing fruit.
Question: How much do you spend on exploration annually?
— I can’t tell you our annual costs; our geological exploration program is cyclical and lasts one and a half to two years. Thus, in 2016-2017, we allocated about 10-11 million dollars for promising geological exploration, next cycle— 2018-2019 will be approximately the same. In addition, we constantly conduct operational exploration within the quarry.
Question: What do you see the Pavlik air defense system going to be like in another 10 years?
— I think that in five years Pavlik will process at least 15 million tons of ore and produce up to 20 tons of gold.
Question: Your main projects are in the Magadan region, do you plan to continue to develop locally?
— In the Magadan region, in addition to Pavlik and Rodionovsky, we have several more licenses, and, of course, we will deal with them.
As Pavlik and Rodionovsky reach their planned production capacity, we will have freed up both funds and opportunities, which we intend to use to diversify our business.
Question: And you will also remain a private company, is there any idea of becoming public or going public?
“Of course we are considering and thinking about this issue, but we will not do it now. Both IPO and M&A, as an option, with those who are already traded on the stock exchange, but all after 2020.
Now that we are planning to double our production, this is not entirely logical; we will first double in size and then perhaps go for an IPO.
Question: Who do you see as M&A partners from today's industry players?
— For now, we are not considering anyone specifically, but it could be any company and not necessarily from the top ten.
Question: And how can you evaluate yourself in this perspective?
- Now, you can’t value it in money. Starting from 2020, Pavlik will produce about 12-13 tons of gold annually, based on this the value of the company will be calculated.
The price of the issue is more or less understandable, but there are still a number of circumstances that shape the price - a question of desire, a question of interests... But I think that if one of the Russian companies wants to get closer to our two leaders (in the ranking of gold producers, ed. .), then he realizes that the only way to do this is to team up with someone.
Sergey Padalko, Bulletin of the Gold Producer
Pavlik deposit is part of the Omchak ore and placer cluster in the Magadan region. It was opened in 1942.
The gold mining plant on Pavlik was put into commercial operation in August 2015. Investments in the project are estimated at $550 million. Mining at the deposit is carried out by open-pit mining, gold recovery is at least 82%. In 2015, the Pavlik air defense missile system produced 1,081 tons of gold and 270 kg of silver, in 2016 - 3,839 tons of gold, in 2017 - 6.5 tons.
Makarov Vasily Pavlovich, born on August 28, 1955 in Tashkent. Graduated from the geological faculty of Tashkent state university majoring in "Geological Survey and Search for Mineral Deposits". Worked in the Kyzylkum geological exploration expedition, at one of the enterprises of Newmont Mining Corp, in consulting company"NBL gold" Participated in the assessment of mining sites in Russia and abroad. Since 2007 he has been working at JSC ZRK Pavlik.
Conference "Gold mining companies in Asia, Eastern and Western Europe and the CIS"
The factory of the Pavlik Gold Mining Company OJSC has fully begun work on the development of one of the largest deposits in Kolyma, which is part of the Yana-Kolyma gold province. Pavlik - first large deposit Yana-Kolyma gold province, involved in mining.
The volume of investments in prospecting work, study, geological exploration, and construction amounted to more than 10 billion rubles. Currently, the mine has created about 600 jobs. Gold production in 2015 will be 2 tons.
The factory's design capacity is 3 million tons of ore per year, but an adjustment is being made to increase it to 4 million. This will allow the extraction of 7-8 tons of gold per year in the future. For comparison, the entire Magadan region produces 24 tons of precious metal per year.
Ore at the mining and processing plant is supplied from an open pit. The rock itself, coupled with permafrost, requires only one type of preparation for transportation - explosion.
- Attention, quarry, explosion!
Thus, 38 thousand cubic meters of rock were immediately released at the Pavlik mine.
The ore here is blasted, going deeper and deeper. Gold lies at a depth of almost a thousand meters. The vein is huge, geologists explain, but getting to it is a separate science. Immediately after the explosion, heavy equipment arrives at the quarry. She removes the waste ore and takes out the rich gold. They will now work here continuously for the next two days - until the next explosion.
The first explosion marks the start of work at the Pavlik mine. The factory installed three mills for ore processing. Two have already operated in experimental mode, and now a third is being launched, gradually bringing the mine to its design capacity. The factory will essentially work out the mining scenario in this gold-bearing province.
“Particles of gold in the ore - they need to be opened. This is what crushing and grinding are for. When the ore is crushed and crushed, these gold particles are revealed, which we extract using gravity,” says Andrei Solodenko, a technologist at the gold extraction plant.
The Pavlik mine was built for several years, essentially in the taiga, where there was no infrastructure or roads. Large equipment was brought here, a residential complex was erected, a quarry was developed, and a factory was built. This year we spent several months setting up equipment, during which we already received our first gold.
“This gold is one of the first ingots that we obtained through commissioning work. Eighty percent gold, twenty percent silver,” says Sergei Dyk, deputy head of production at the gold recovery factory.
At the same time, additional exploration of resources is constantly underway at the enterprise.
“Eastern Pavlik - today we estimate resources of about 150 tons. That is, we have resources, and we will transfer them to reserves, accordingly, after carrying out the work. We’ll put it on the balance sheet of the State Reserves Committee, and this is like a continuation of a quarry, about the same,” says Vasily Makarov, general director of the Pavlik air defense missile system.
The launch of the Pavlik mine is the start of the development of the huge Yana-Kolyma province. It is still poorly explored, but it is already known that its wealth reaches many thousands of tons of gold.
The ores here are special and require their own approach.
