Signing of the agreement between Alrosa and the Magadan government image
Alrosa will invest RUB 8.3 billion ($102.1 million) on the expansion of its Degdekan gold operation as it looks to diversify its business amid the challenging diamond market.
The company, which purchased Degdekan last year, signed an agreement to develop the asset and perform geological exploration work that will see it search for gold deposits both within and outside the current mining area, it said last week. The financing comes on top of the RUB 24 billion ($274.2 million) initial payment Alrosa made when it purchased the site from Polyus.
The new project will create up to 1,000 jobs and help Alrosa create a social partnership with the Magadan region where the mine is located, the company explained. The new investment marks the first project in Alrosa’s history in which gold mining is the main goal, noted CEO Pavel Marinychev.
“The agreement with the government of the Magadan region opens up opportunities for us to expand geological exploration and develop this area,” Marinychev said. “We see significant potential in gold mining and intend to use our experience and expertise in geological exploration and mining.”
Once the operation reaches full design capacity, which Alrosa initially estimated at 2030, it will produce 3.3 tonnes of gold and will continue output until it reaches its end of life in 2042.
Image: The signing of the agreement between Alrosa and the Magadan government. (Alrosa)