Russian gold production soaring

Between January and April, Russian gold-mining enterprises produced 14.13 tonnes of gold, up from 11.82 tonnes in the corresponding period of 1997.

Russia’s economics ministry has set a production target of 115 tonnes gold for 1998, roughly three-fourths of a tonne less than the country’s 1997 output. The biggest producer in the January-April period was Omolon Gold Mining, a joint venture among Englewood, Colo.-based Amax Gold (with 50%) and five Russian partners. Omolon is developing the Kubaka gold field in the Magadan region, from which it produced 4.2 tonnes (roughly 135,000 oz.) gold in the first four months of the year, compared with 8.94 tonnes (287,000 oz.) in the whole of 1997. Total gold output in 1998 is expected to reach 12.5 tonnes (402,000 oz.).

The Magadan region is expected to account for nearly one-quarter of Russia’s gold production this year.

Farther west, in the internal Russian republic of Buryatia, gold producer Buryatzoloto churned out 19,438 oz. of the yellow metal in the first quarter of 1998, 50% more than in the corresponding period in 1997. The Russian Project Financing Bank, which holds an 11.5% interest in Buryatzoloto, reports that profits in the first quarter stood at $73,000 (or 12 cents per share), compared with a loss of $1.2 million ($2.14 per share) a year earlier. The improvement was attributed to an increase in revenue, profit on core operations and a reduction in working capital expenditures.

Gold sales in the first quarter totalled 16,992 oz. at an average sale price of US$291 per oz. (US$360 per oz. if hedging revenue is included). Roughly 65% of planned production for 1998 and 1999 has been hedged, at US$370 per oz. for 1998 and US$375 per oz. for 1999.

Buryatzoloto holds licences to develop the Zun-Kholba and Irokinda gold fields in Buryatia. The company’s first-quarter operating cost was US$173 per oz. gold sold, down from a planned US$186 per oz. and far lower than its first-quarter 1997 cost, which was US$230 per oz.

High River Gold Mines, with 29.11%, is the biggest shareholder in Buryatzoloto.

— With files from Interfax News Agency.