Magadan’s gold sector looking brighter — New investment, projects could lead to greater production

Although mines in the mountainous Magadan region of Russia produced 26.1 tonnes of gold in 1997 (6.3 tonnes more than were produced in the previous year), output was well below expectations. However, two recent developments may have the effect of boosting production in the district.

The Kolyma gold refinery, owned by U.S.-based Intertech, is scheduled to produce its first gold ingot this month. At full capacity, the US$14-million plant is expected to process up to 40 tonnes of dor bullion per year, equivalent to 1.2 million oz. of refined gold.

The refinery will be responsible for processing all the gold mined in Magadan, which, for 1998, is projected to reach 28 tonnes.

Meanwhile, the French bank Societe Generale will lend US$50 million to the region’s cash-strapped gold producers. (The Russian federal government, by comparison, has refused to lend any money.) Government officials say the loan could finance 12 tonnes of gold production in 1998.

There are also signs of growth in the region’s mining services sector.

Increased production at the Juliette, Shkolnoye and Pavlik operations is expected to boost demand for emulsion explosives. The regional government is mulling proposals to build a factory large enough to supply the region.

Two sites have been proposed for the US$4-million plant: the port city of Magadan, and Karamken, a small settlement 100 km north. About 500 tonnes of explosives would be produced on a trial basis before a decision is made to proceed with full-scale construction.

Gold producers in the region use 3,900 tonnes of explosives per year, chiefly ammonite cartridges supplied from central Russia.

— With files from Interfax News Agency.