Investment Plan, Gold Mining Sector

In September 2006, Navigator Consulting was commissioned by a Russian company to prepare an investment promotion project for the development of gold exploration and mining of a gold-bearing area in Karelia Province, Russia.

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The deposit is located on the central part of the gold-bearing area on the western bank of a lake, in slightly hilly plains, with 80% coniferous wood cover (substantially cleared), and marshes and bodies of water covering the remaining terrain.

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The deposit consists of a 30-meter wide mineralised sub-meridonal area, where a number of scattered wells (150-250 meter depth) were drilled along a 1.5 km line. The gold content is assessed at between 1 to 25 grammes per tonne, for an average content of 8.1 g/t. Towards the surface, mineralization reaches 13 to 24 g/t. Ores are gold pyrite type and free of admixtures or other components. The deposit predominantly contains nugget gold with 2+0.5 mm grain size.

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Exploration and assays conducted by state mineral surveys provide an estimate of reserves and resources of the field and ore knot. The ore-bearing zone comprises a series of steeply pitching ore bodies (thicknesses 1-7 m, length 50-70 m) occurring at a depth of 5 to 200 m, in an area 250 m in length by 30-40 m in width.

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A number of associated areas of mineralization are found in the area of license. The total resources and reserves are estimated at 7.8 tonnes recoverable reserves (C2+P1) with a further potential of 105.3 tonnes resources, for a total resource estimate of 112.3 tonnes.

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Navigator's  tasks included:

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• Structuring the investment project into two clearly-understood phases, with a preliminary project finance plan for each phase;

• Setting up meetings with various banks and financial institutions in Moscow and London and pitching the project to potential investors;

• Coordinating additional investment promotion activities.

 

The business plan was developed based on a two-stage development process:

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• Phase 1: Reserves Increment and Gold Mining (2007-2008): gold mining of the field to a depth of 50 m, using open-pit mining. The construction of a concentration plant will be used to refine gold on site.

• Phase 2: Follow-up Reserves Increment and Commercial Gold Mining: mining of the central accumulation and flanks of the deposit using open-pit mining up to 100 m, and closed mining up to 300 m.

 

The development of a production complex based in the area was planned, comprising:

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• Mining complex: pits, rock dump, settler;

• Concentrating complex: modular-based concentrating plant located in a hangar, plus administration and security facilities and fence, ore stockpile, tailings storage with a pump station and water circulation system;

• Engineering support complex: diesel power stations, water supply system with pump station, local heating plants, production and amenity areas, waste disposal plants (sewage and storm-water run-off), inventory and fuel warehouses, auxiliary sites.