Nelkobazoloto

In 2004, CJSC Nelkobazoloto, in parallel with the mining of the Shkolnoye deposit, carried out preparatory development work to ensure the efficient mining of more than 110,000oz from levels +600m and +750m in 2005–2008.  The gold grade in the explored resource blocks is up to 32 g/t.  Preliminary geological exploration data suggests that ore bodies in the Shkolnoye deposit can be traced to depth, maintaining their orientation and continuing to be gold-bearing (gold grades vary 1–36 g/t, in the deepest hole at level 350m reaches 543.5 g/t). Fairly conservatively, the additional potential of the lower levels of the Shkolnoye deposit can be estimated as 60–70,000 oz of gold with an average grade of up to 16–22 g/t.  In 2005 Nelkobazoloto mined 54,700 tonnes of ore and mining was switched to the lower horizon and, according to drilling results, there are 117,029oz of P1 reserves with a gold grade of 14.2g/t on levels -350m and -650m.  In 2005 1,200m of underground drilling was carried out to provide access to the lower horizon. 

In 2006 Nelkobazoloto began extracting gold from the +650m horizon at the Shkolnoye deposit.  During 2006 preliminary work to move to lower horizons of the deposit was carried out.  A 2.5km decline was driven, with completion of preparation for ore transport, and new extraction panels were blocked out.  The move to deeper levels involved additional costs and resulted in a decrease in production.  In 2006 32,800 tonnes of ore were extracted, 29,600 tonnes were processed at the plant and c.9,000 oz of gold were recovered. 

Nelkobazoloto is entering the final stage of production at the Shkolnoye mine where development and exploration are simultaneously establishing the reserves of the lower horizons of the deposit.  In order to compensate for the fall in production in 2006 Omchak received a subsoil use licence and commenced pilot production of alluvial gold in adjacent regions to the Magadan Region, in the Republic of Sakha (Yakutia).  Work is being commenced in order to prepare applications to receive new projects in this region. 

Berelekh

During 2004 Berelekh installed a WA-420 loader on the open-pit development of gold-bearing placer deposits of the upper River Kolyma, making it possible to increase the throughput volume of gold-bearing sand, gold production, and consequently, profitability.

About 40 shallow placers are currently being worked, many of them known since 1937–39, and still of commercial interest. The potential of developed placer regions in the Kolyma basin is far from exhausted. For example, in the placer of Maldyak stream (worked since 1937), in the 2004 season, with a single excavator, 129.2oz of gold to a fineness of 922 were produced in one 24 hour period.

During 2005 the company acquired 10 additional Libcher trucks in order to reduce operational costs.  There are c.10 tonnes of gold bearing sands with an average grade of 1.1g/m³ available for open-pit extraction and 312,473 oz of C1 and C2 undergound reserves with an average gold grade of 3.86-9.77g/m³ at an average depth of 60m.  A 26 oz nugget (nuggets are usually between 0.04oz and 322oz) was extracted from one of the washing apparatuses and daily gold production on one piece of equipment reached c.92 oz per day. 

In 2006 Berelekh carried out alluvial gold extraction in the Magadan Region on 37 licence areas, totalling more than 1,500km².  It is estimated that Berelekh has on-balance (commercial) reserves for open-pit mining for over six years.  In addition, each year Berelekh carries out exploration at the same time as extraction, which is expected to lead to a growth in reserves each year of between 38,000 and 48,000 oz.