Mining at Pokrovskiy is entirely by open-pit, using an owner-operated mining fleet.  Most of the equipment is of Russian origin and is appropriate in terms of size and capacity. Gold mineralisation at the deposit is associated with volcanic and intrusive rocks within a Jurassic-Cretaceous sedimentary sequence cut by extensive block faulting.  Pokrovskiy pits produce c.2 million tonnes of ore a year with an average stripping ratio of c.2.4m³/t.  The gold is recovered on the mine using Heap Leach (0.7 million tonnes/year) and Resin-in-pulp plant (1.9 million tonnes/year) technologies. 

In 2004 the Group also introduced the MicroMine computer system which is used for pit optimisation and mining plan development.  JORC standard reserves and resources of Pokrovskiy pit shell derived from the MicroMine pit model demonstrated the reliability of the Russian system of classification.

A computer monitoring system using satellites and global positioning system hardware is also used on the mine; the implementation of this system has allowed the Group to significantly increase efficiency and decrease dilution.

Mining capacity at Pokrovskiy increased in 2005 as a result of an increase in the mining fleet, personnel and general operations.  Equipment purchases included five new Belaz 45 tonne trucks, two large Caterpillar bulldozers and numerous smaller items.  The entire truck fleet is now tracked and co-ordinated remotely which has improved both ore waste and transport logistics.  In 2006 an additional five new 45 tonne Belaz trucks and three Caterpillar Cat-330 excavators were purchased. 

Renewal of the mining and transportation fleet was carried out in 2007, in addition to the equipment acquired in 2004-2006.  The fleet was expanded through the commissioning of an EKG-5 digger with a bucket capacity of 5m³ and the acquisition of three new 45 tonne Belaz mine trucks. These allowed the amount of advanced stripping at deeper levels to increase. A further three Belaz mining trucks are expected to be delivered in the first quarter of 2008.

During 2006 the two main pits of the deposit were merged and exploration works around the Pokrovskiy pit confirmed potential for expansion to the east and at greater depth.  The aniticipated reduction in the cut-off grade due to the increased gold price is expected to enable an increase of the projected depth of the current pit and re-definition of Pokrovskiy reserves resulting in a c.200,000oz increase.   The pit expansion will take into account additional reserves and resources discovered recently and is expected to include both lateral pushbacks and a deepening of the ultimate pit from 140m to 200m.

In 2007 the higher price of gold led to the recalculation of the economic depth of the open-pit at Pokrovskiy compared to the depths used in the mining plan. This allowed an increase in the estimated reserves of the Pokrovskiy deposit which would provide the RIP plant with sufficient material to maintain its current throughput until the end of 2012.

Recovery rates from the heap leach process increased by 50% in 2006 and this made treatment of lower grade material more economic.  This was achieved by stacking and treating the heap leach pads before the winter period and leaving them for further leaching when thawed. 

In 2007 the increased capacity of the RIP plant and the higher price of gold allowed lower grade ore to be economically processed on the heap leach pads without an increase in the amount of mining works undertaken.  Recovery rates remained in line with the previous year at c.69%.

Pokrovskiy enjoyed another successful year in 2007, while undergoing transition to the treatment of non-oxidised ores coming from deeper levels of the pit.  Higher grades, together with long-term planning and continuous optimisation of the process circuit, achieved a 15% increase in gold produced at Pokrovskiy in 2007, compared to the same period in 2006.  The 237,000 oz of gold produced in 2007 exceeded the budgeted figures by 8%.

Future construction work

In December 2007, together with work on the addition of the ball mill for the first circuit, work commenced on the construction of a full second processing line at Pioneer.  Agreements have been signed for the planned larger 7.5m x 2.5m SAG mill and a 4.0m x 6.0m ball mill, sourced from the Peoples Republic of China, as well as for the bulk of the steel requirements.  The second line is expected to be commissioned in December 2008.

Planned additions to the mining fleet, primarily to address the waste stripping requirements at Pioneer, are underway and contracts are expected to be finalised in first quarter of 2008 for the purchase of an additional EKG5 electric shovel, two 10m³ excavators, and large 90t capacity haultrucks. The ore fleet is also to be expanded by the addition of larger 45-55t capacity haultrucks.

Construction of infrastructure continues as planned, including the workers’ camp, earthmoving equipment garages and access and haul roads, as well as the installation of a second 35kVA power line from Pokrovskiy to supply the Pioneer second circuit.