Gold

The Government of the Okrug is focused on attraction of Russian and foreign investment into the industrial development of the biggest fields and deposits and exploration of perspective gold and ore deposits. Most of attention is drawn to the exploration of ore deposits which is highly promising in terms of extraction volume; however, it requires large investment.

Creation of a favourable investment atmosphere in the branch resulted in the cooperation with such companies as Highland Gold Mining (Maiskoe) and Berna Gold Corp. (Kupol). Foreign investment into Kupol deposit amounted to $44.5 million in 2004 and $140 million in 2005. Investment into Maiskoe deposit as of the 30th of April was $82.6 million. The total investment volume by the end of 2006 will reach $96.2 million.

The comparison of major economic characteristics of industrial exploration of gold deposits of the Chukotskiy AO, with a number of Russian deposits in other regions with similar economic and infrastructure conditions and also with foreign gold deposits of similar quality and production volumes indicates that the major economic characteristics – specific capital investment, process costs and ROI – are quite similar. High rate of preparation for exploration of basic Kupol and Maiskoe deposits of the Okrug that has taken place for the last few years also speaks in this favour.

The total cost of exploration of Maiskoe, Kupol and Valunistoe deposits is expert-estimated between $285 and $310 million, the ROI being on between 11.1% and 34.4%, which is rather attractive for the gold deposits of the CHAO. Normally, the profitability of exploration of gold deposits in Russia is estimated at 10-15% and even lower.

The most attractive profitability (over 10%), stays with 10 deposits with possible total annual gold mining of about 50 tons. These objects have a rather big safety margin in relation to the fluctuation of gold prices. Industrial exploration of a prepared part of all deposits and positive results of the geological exploration will make it possible by 2015 to make up for the withdrawn capacities of gold mining companies of the Okrug being utilized or built.

According to Strategika Ltd., due to ore mining alone, the volume of gold extracted by 2008 will become quadruple or even quintuple. By 2020, gold mining will sustain a stable level of 25-30 tons a year with annual profit of $600-650 million (exchange rate being $1 = 27.5 rubles, and price of 1 ton of gold - $21.8 million).

Provision of mining companies with alluvial gold resources with the account of prediction resources is up to 20 years and 9 years for the companies exploring basic deposits.

For alluvial gold, a reserve of sustaining the level of mining is the revaluation of man-made deposits and more intensive involvement of them into procession using improved rinse facilities.

Attractiveness of the branch can be explained by high growth rates of the world gold prices. This is related to the demand overwhelming supply, decrease of purchasing power of the dollar, and general political instability. With the trend staying unchanged, by 2020 the price for gold will reach $600-650 per ounce.

Attractiveness of the Okrug is also sustained by the growth of investment into geological exploration (GE). The budget of geological organizations of the Okrug is up to 80 million rubles a year. According to the “Long-term State Program of Study and Reproduction of Mineral Resource Base for 2005-2020,” investment into GE for the Fareast Federal District will amount to 28.1 billion rubles in 2006-2010 and 61.8 billion rubles in 2011-2020.

An increase in the investment potential of the branch is connected with big infrastructure projects of the Government of the CHAO. First of all, this implies building and reconstruction of highways (link to “Transport”) with an entrance into developing non-ferrous metal deposits. Since 2001 a number of large programmes of development of communication facilities (link) have been realized. Development of social infrastructure and increase in quality of life has a positive effect on the personnel potential of the region.

Table 7. Estimation of costs of industrial exploration of expected native gold reserves of the Chukotskiy AO (according to TSNIGRI).

№ Objects of registration of expected resources Categories of registration of expected resources Gold,t Method of mining Capital investment $ mln Annual productivity Special investment for a unit of annual productivity Profitability of capital investment
ore, K tons gold, t $/t
1. Soviskoe deposit Pi 10 underground 55 150 1,5 396 2
2. Prizrak Ore manifestations Pi 5 н 22 30 1,5 722 30
3. Palyangai ore field Р2 30 м 90 250 4,0 364 15
4. Sypuchenskoe ore field Pi 5 и 43 90 1,0 479 0
5. Severo-Vostok deposit Pi 5 м 84 83 1,2 494 1
6. Zapadnyi and Nizkiy areas Р2 5 м 38 75 1,2 513 2
7. Burgakchanskays perspective area Р2+Рз 100 open 200 600 9,0 331 20
8. Tsentralno-Aluchinskiy ore deposit Рз 20 undergr. 188 200 2,3 445 5
9. Kapelka ore manifestation р2 77*} open 140 350 9,0 402 33
10. Prikup ore manifestation р2 5] undergr. 30 50 1,2 592 7
11. Parts of Ozernaya, Peledonskaya and Vylvyveemskaya areas Р2+Рз 170 200 600 17,0 331 54
12. Levo-Envyvaamskoe manifest. р2 10 50 83 2,2 617 12
13. Televeemskoe ore field р2 66Р) open 200 600 7,4 331 9
14. Gornoe ore field Pi 17 1! 90 200 2,7 445 5
15. Zhilnoe ore field /em> р2 10 66 125 1,7 530 2
16. Osennee ore field р2 35 м 105 250 3,6 425 8
17. Erguveemskoe ore field р2 37 undergr. 74 150 4,2 493 25
18. Nutekin-Nitymokinskoe ore field р2 40 140 350 4,8 402 10
*) considering incidental silver counted as conventional gold

Anadyr

9:40 -14°C

COMMENTS

The program of economic development in Chukotka can be carried out, considers vice-premier of government CHAO M. Sobolev.

First of all, the long-term program leans on resources of peninsula. Let’s begin that geological resources of Chukotka are explored today on 10 %-17 %. The next regions are explored much better. And even on these, tentative estimations resources here can be found. The proved resources of gas on the Priosernoe deposit - 7,3 billion cubic meters. Oil resources are estimated approximately in 10 million tons, the proved stocks make 4 million tons of them. They are dispersed on small Fields, such, as Hatirskoe, where extraction is conducted by "Sibneft" company. But it is not necessary to dismiss a shelf – it’s insufficiently studied yet, but there are data, that it’s resources can make up to 14 billion tons of conditional fuel. Exxon Mobile Company in similar ice conditions, in Baffin bay has constructed 7 platforms. What prevents to construct them here?
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Reindeer breeding can be profitable: E. Marochkin acting on the head of agriculture and foodstuffs department makes comments.

There was a moratorium on an industrial slaughter of deers in district till 2006. But now it is removed, farms have allocated a contingent for commodity slaughter this year. It is planned to hand over in a trading network about 9 thousand deers this year. Within the limits of national project the agrarian and industrial complex have got slaughter area on terms of financial leasing which is assembled in Kanchalan. Basically its value is in that correctly cut production will receive a trade look and will answer all established norms. The livestock of deers for September, 1st - from above 183 thousand. It’s below the level of 1990 (490 thousand heads), nevertheless, in Chukotka a livestock grows on faster rates, than on Yamal, and it’s our main competitor. Potential market - not only Vladivostok, but also Japan, Korea, China. Reindeer breeding is, at least, preservation of a traditional way of life of native people and food safety of region and when sales volumes become great enough, branch can turn in profitable.
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