Bloomberg News

Russia Boosts Estimate of Biggest Untapped Gold Field

October 04, 2007

Russia, preparing to sell the rights to its largest untapped gold field, increased the estimated size of the Sukhoi Log deposit and said it may generate $30 billion in revenue for the developer.

The eastern Siberian field probably holds 2,956 metric tons of the precious metal and 1,541 tons of silver, the Natural Resources Ministry said in an e-mailed statement today. The gold figure compares with a 2,000-ton estimate as recently as last month and the 1,000 tons Soviet geologists predicted in 1977.

``It's huge,'' Vladimir Zhukov, a senior analyst with Lehman Brothers, said by phone from Moscow. ``The size of the field will probably influence its lifespan more than attractiveness for the bids,'' which he estimates at about $400 million to $800 million.

The estimate of the size of Sukhoi Log was conducted by the government and OAO Polyus Gold, Russia's biggest miner of the metal. Polyus plans to bid for the deposit. Russia will tender rights to the field, the ministry said in the statement, adding that it may cost about $1.6 billion to develop the gold deposit.

The government may hold a tender late this year or early 2008, Interfax reported in July, citing Nikolai Suslov, deputy head of the Irkutsk natural-resources agency.

Russia's biggest mining company Norilsk Nickel, its largest diamond producer ZAO Alrosa, and OAO Polymetal together with a partner may also bid for Sukhoi Log, Zhukov said. The ministry is seeking to classify the field as a strategic deposit, which would limit foreign ownership to less than 50 percent.

``An important question will be whether Sukhoi Log is classified as a strategic deposit,'' Zhukov said.

To contact the reporter on this story: Bradley Cook in Moscow at bcook7@bloomberg.net,

To contact the reporter on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net.


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