During 2003, the Group entered into the Rudnoye Joint Venture with the second largest gold producer in the Amur region, OAO Priisk Solovyevskiy as a 50/50 partnership in order to develop hard rock gold assets belonging to OAO Priisk Solovyevskiy using the Group's expertise. The Joint Venture’s primary asset is the Odolgo deposit, a small gold deposit within a retrograde metamorphosed zone in Archaean-Proterozoic metamorphic rocks, in the North West of the Amur region.
There are two parallel North-South magnetic structures (titanomagnetite bodies) which are straddled by the gold ore body. In 2006 evaluation of the deposit was completed with a final 900m of core drilling. This small deposit contains coarse free gold with no sulphides. It is easily processed by gravity separation with 80% recovery. At an average grade of 4.14g/t, the thickness of individual ore bodies ranges from 1.6m to 8.9m, and length 60m to 200m. It should be noted that because this deposit is classed as "small and complex", Russian reserve categories highter than C2 will never be reported. The deposit is estimated to contain up to 32,000 oz in C2 + P1 category reserves and resources and 376,000 oz in P2 and P3 resources.
It is planned to start pilot pit development in 2007 to finalise the study of the metallurgical properties of the ore in order to obtain final GKZ approval of reserves by the end of the year.
At the end of May 2007 a modular plant with gravitational benefication technology and concentrate processing methods using intensive cyanidation was put into operation at the Odolgo site. During June, commissioning works and simultaneous exploitation works were carried out. The first batch of concentrate was processed at the Pokrovskiy resin-in-pulp plant in June at a newly built intensive cyanidation facility. The first production from the deposit is scheduled for the second half of 2007 at a production rate of 6,000 oz per annum from May until September.
In 2006 the Rudnoye Joint Venture won the auction for the Soloviovskiy ore prospective area in the Amur Region. The geological survey is currently under development and exploration work here is planned to commence in the second half of 2007.
