Bloomberg: Rostec to Seek Swap of Sukhoi Log for Gold Miner Stake

Bloomberg: Rostec to Seek Swap of Sukhoi Log for Gold Miner Stake


Rostec Corp. sees the Sukhoi Log gold deposit, the country’s largest, as a ticket into the bullion business and may offer to exchange the development for a stake in a producer of the metal should it win the project.

“We will tender for Sukhoi Log alone," Andrey Korobov, the head of the state holding company’s investment arm, RT-Business Development, said in an interview with Bloomberg in Moscow. “We’ll make a proposal to a wide range of gold-mining companies to swap this asset for a stake in a large producer on market terms.”

Sukhoi Log, in the Irkutsk region, has reserves of 97 million ounces of gold and 54.3 million ounces of silver by Russian standards and is among the world’s 10 largest deposits. While holding 1.1 grams (0.03 ounce) to 2.8 grams of gold per ton of ore, most of the reserves may be extracted through an open pit, making the development less costly. Companies, including Polymetal International Plc, Polyus Gold International Ltd., Nordgold NV, Kinross Gold Corp. have shown interest in the deposit, depending on the license terms.

“We see gold mining as one of the most attractive sectors as this product, purely psychologically, is always in demand," Korobov said. 

The tender date has yet to be set, said Nikolay Gudkov, a spokesman for the Natural Resources Ministry. International companies’ participation will be limited, he said. It is hard to say if any Russian gold miners will be ready to swap the stake for the deposit, but Chinese companies may be interested, Chuyko said.

Separately, Rostec may also get 25 percent in the Udokan copper deposit in the Zabaykalsky region, Korobov said. It’s now controlled by Alisher Usmanov and his partners who own Metalloinvest Holding Co., and Rostec recently got the option to buy within 10 years, said Korobov, who is a board member of Baikal Mining Co., which is developing the project. It’s also discussed building a smelter that will refine ore not only from Udokan, but from Russia and Mongolia’s Erdenet project, in which Rostec has a 49 percent stake, and GMK Norilsk Nickel PJSC’s Bystrinsky project, he said. Norilsk’s press service declined to comment.