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Sukhoy Log – one of the world’s largest gold reserves

With estimated reserves of some 1,953 tons of gold (62.8 Moz), Sukhoy Log in the Irkutsk region of Russia is one of the world’s largest untapped deposits of gold. In January 2017, the right to develop the formerly state-owned deposit, which is located next to Kopy Goldfields’ project areas in Lena Goldfields, was sold to a joint venture aiming to start gold production there in the mid 2020’s.

History

Sukhoy Log – the name means “dry valley” – was discovered in 1961 and intensively explored in the 1970’s. Although many internal reports were written, and a few papers got published in Russia, little was known of the deposit abroad because of former official secrecy restrictions. But the exploration for – and discovery of – the Sukhoy Log deposit was in fact the culmination of many years of study and development of the Lena Goldfields by several generations of geologists and miners. The deposit is entirely “blind”, i.e. has no surface outcrop, and was discovered only by geologists using new ways of geochemical prospecting. Intensive exploration started in 1971 and was completed in 1977. The work included 209.6 km of diamond core drilling in 846 drill holes, 11.7 km of underground drives, 61 raises, of which 1,546 m were in ore, 110.3 km of trenches, 13,000 channel samples, three bulk samples of 150 t, 800 t and 980 t – and many tens of thousands of assays for gold. In addition to the Sukhoy Log deposit, several smaller gold deposits of the same type were discovered in the region, including Verninsky, Vysochaishy and Ugakhan. The two major underground drives of the 1970’s exploration program was re-opened in 1995 and provided direct access to – and observation of – a large part of the interior of the orebody for the feasibility study that was conducted in 1995-96 by Star Mining Corporation, based in Sydney, Australia

Aimed production start mid 2020’s

In January 2017, the right to develop Sukhoi Log was sold to a joint venture of miner Polyus and state conglomerate Rostec. The joint venture, SL Zoloto, acquired the deposit for RUB 9.4 billion (MUSD 158), compared with the starting bid price of RUB 8.6 billion. Polyus is the largest gold producer in Russia and one of the top ten gold miners globally, by ounces produced. Polyus also holds the fourth largest mineral resources base in the world. SL Zoloto intends to conduct additional exploration works and a feasibility study, which is expected to last for approximately three to four years, supported by international mining and engineering consultants. Based on the results of the study, the company will evaluate options to initiate construction activities at Sukhoy Lo, aiming to start production in the mid 2020’s. CAPEX is estimated at RUB 90-100 billion (approximately USD 1.5-1.7 billion) with development costs of some USD 4-5 billion. According to an estimate by AMC (same Australian engineering company which performed the Scoping study for Krasny in 2019) from October 2018, Sukhoy Log’s gold resources currently stand at 962 mt of ore, grading 2.1 g/t gold for 63 Moz of contained gold. The expected annual production will be some 1.6 Moz per year, starting from 2026. Today, the gold production at Lena Goldfields corresponds to some 1% of the annual global gold production – when Sukhoy Log comes into production, this figure will increase to some 2.5%. The development of such a large project is expected to have a significant impact on the social and economic development of the Irkutsk region, where Sukhoy Log is based, with considerable investments in infrastructure, etc. 

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