Author and Speaker: V.N. Rudakov, Chairman of the Committee for Support of Entrepreneurship in Mining and Production of and Trade in Precious Metals and Precious Metal Items of the Chamber of Commerce and Industry of Russia, Chairman of the Board of Directors of ZAO Polyus Zoloto. (Moscow, GEOMINEX-2008)

For many decades, the gold mining industry of the Soviet Union remained one of the largest in the world holding the well-balanced second place after South Africa in terms of gold output.
From 1991, the industry started to decay, when instead of ten large territorial enterprises of Russia there emerged over 600 subsoil using companies mining from their first tens of kilos to 1.5-2.0 tons of metal per year. Naturally, such businesses could neither maintain geological exploration nor gold mining in the country.

Consequently, the gold output in Russia decreased more than one and a half times in the period from 1991 to 1998. The industry started to recover in the end of 1990s. Initially, the output increased because commercial banks began earnest crediting of season gold mining. This was followed by consolidation of companies’ assets.
Today, the Russian gold mining business features the operation of such large companies as Polyus, Polymetal, Buryatzoloto and such companies with Western capital as Kinross Gold, Barrick Gold, Newmont Mining, Peter Hambro Mining, Highland Gold Mining and others. So now it is possible to say that the process of shaping the Russian gold mining industry as a modern segment of our economy and as a part of the world mining industry has already taken place.

The world mining industry is ever more targeted at developing large-size gold deposits. Cost and performance indicators in developing such deposits are based on employing high capacity mining and beneficiation equipment and technology. Relatively low content of useful components, significant stock of ore and metal and, consequently, enormous dimensions of ore bodies are the major features of large-size deposits.  However, despite the significant dimensions, discovery and evaluation of such formations appear to be a complex geological task, whose optimal solution is of great economic significance.

Gold ore field “Natalka” may serve such an example. Located in the Magadan Region, this field was developed underground in the course of 60 years. Its lode ores have an average gold content of 3.5 to 5 g/t. Currently, although the gold stock balance for underground mining exceeds 200 tons, the underground mining is loss-making. Revision of the geological and economic concept in favour of open-pit ore extraction and follow-up exploration of this deposit within the frames of a renovated geological and structural model of the deposit performed in 2002-2006 actually resulted in discovery of a new and one of the largest gold ore formations in the world. Gold reserves amounted to 1836.1 tons within the boundaries of the compact Ore Chute with a gold content of 1.7 g/t. The State Reserves Committee of Russia approved the balance stock in the amount of 1500.8 tons and the off-balance stock in the amount of 335.3 tons. The authors of the exploration project in the Natalkinsky Gold Field are V.V. Rudakov, M.P. Kazimirov, and S.A. Grigorov.

The discovery of large gold reserves in the geologically well explored area reveals an enormous potential of the Central Kolymsky Ore Area. On the other hand, the same fact reveals significant gaps in the theory and practice of forecasting (local metallogenic zoning) and in evaluation of ore grade mineralization at early stages of geological exploration of territories, since this ore formation being unique in its size did not receive due evaluation for quite a long time. To solve this problem is of current concern to the world geology as a whole, which is proved by the low efficiency of exploration works and insufficient rate of discovering new gold fields and other mineral resources.
In some part, this gap is closed by the technology of exploring ore deposits based on modeling a multi-level ore-forming system (OS). To model an OS, it is possible to use geochemical data of different scales, which permits to locate and prospect any ore deposit within the shortest time limits by successively modeling objects corresponding to the natural hierarchy in the topological sequence: ORE CLUSTER – ORE FIELD – DEPOSIT – ORE ZONE.

The identification feature of a local OS is its structure and relative dimensions. The dimensions of the local OS are proportionate to the quantity of concentrated mineral substance.
The localized ore body has an altogether three-link structure stipulated by interrelated areas building up a concentrically shaped structure. The center of this structure is occupied by a “nuclear” concentration zone surrounded by an area of scaled-down concentration of chemical elements – the “transit” zone – which are in their turn encircled by an area of scaled-up concentrations composing a “front-end” concentration zone. The “transit” zone is an area wherefrom chemical elements are brought away and re-deposited into the “nuclear” and “front-end” concentration zones. The same mechanics explains the zonal-undular structure of any metallogenic bodies. Differentiation of mineral substance in geological space is developed in the course of convection of mineral substance in the space of an ore-forming system and it is a reliable manifestation of its accumulation in intermediary traps and finally in ore bodies.
(This statement holds good for any mineral deposits formed by endogenous energy, including hydrocarbon deposits.)
 There is an energy and substance balance between the “nuclear” and “front-end” concentration zones, but the concentration and differentiation grade of mineral substance is different.

More detailed OS modeling (on a deposit level) gives a confident opportunity to define physical dimensions of a deposit at an early stage of geological exploration and to concentrate the scale of geological exploration on a localized area, excluding inexpedient tracts.
The next important aspect is related to optimization of exploration works.
Super-large deposits, as it is shown by world experience and our own experience in Natalka, may be explored in the course of three to four years.

The substantiation of exploration grid density acquires special importance due to significant dimensions of ore chutes in large-size deposits. Underestimation of this factor may result either in distorted exploration data or in inefficient expenses and wasted time for exploration. The existing classification of the State Reserves Committee for deposits, which are the simplest from the point of view of gold distribution morphology, envisages the 2nd (the lowest) complexity category of C1 – 60-80 meters girtwise and 40-60 meters dipwise provided ore-grade mineralization is continuously traced by drifts. It is an easy matter to calculate the cost of exploring deposits similar to Natalkinsky if these recommendations are met.

The large-size deposit type should be assigned to the first group among gold ore bodies to be explored by methods envisaging preeminently borehole prospecting for deposits categorized as C1 in increments of 150-200 m girtwise and 50-100 m dipwise.
Russia’s integration into the world economy dictates the necessity of harmonizing the systems of evaluating reserves and resources employed in Russia and abroad. It should be proved and agreed with world geological auditing firms that the reserves approved by the State Reserves Committee in À + Â + Ñ1 categories are completely consistent with estimated reserves according to the JORC classification and in Ñ2 - Ð1 - Ð2 categories match geological reserves according to the same classification.

New approaches to geological estimation of deposits require new approaches to defining the regulations governing the technology of developing these deposits, principal departure from the traditional methods used in design and construction of enterprises capable to process up to 40 million tons of ore per year.
As for the mining part of such projects, there are no big problems there today, since there is a lot of super-modern equipment in the world: dump trucks with a carrying capacity of up to 400 tons, appropriate drilling rigs, new transportation patterns, cyclical-and-continuous methods, etc. There are no fundamental and research problems here, since the scientific basis for constructing stable walls of deep pits has been developed and used for many years.
However, as far as the beneficiation is concerned, there should be an utterly new approach. This refers to large deposits, which will be developed on the basis of these concepts. In the past 40 years, floatation, cyanidation and absorption were traditionally used as the major way of beneficiation. Now there emerged biotechnology. However, calculations and research show that traditional types of ore beneficiation for new enterprises operating on deposits with a low gold content are virtually disagreeable not only by economic, but primarily by ecological reasons.
This puts up a problem to make the processing techniques for these ores entirely new, ecologically harmless and simple and not to make the processing patterns too ramified. Here the future looks promising for gravitational methods of gold extraction with further refining gravitational concentrates into an ingot by way of pyrometallurgy. Besides, the time is right for developing methods of dry beneficiation of gold using radiometric, optical and air separation.
Calculations indicate that even if gold extraction based on such new techniques and such a new approach to deposit development will be 75%, this will prove to be very profitable. With the breast mining and low extraction processing, but without floatation and cyanidation, applying only mechanical beneficiation, there appears an opportunity to cancel traditional tailing ponds and to switch over to dry stockpiling of dump waste products, which will essentially permit to manage the process of building up technogenic deposits fit for future development.

Only large companies can afford scientific research and development of new technologies. Currently, there is emerging a very important trend related to increased requirements on the part of society to ecological safety of any mining industry and in particular to that of gold mining. Today, mining companies all over the world and in Russia are sufficiently deeply involved in ecologic problems.
Within the frames of improving ecologically safe production it is necessary to generate and legally enforce mechanisms stimulating entrepreneurs (subsoil users) to provide for implementation of ecological requirements through technological improvements.

In this way, the principally new scientific approaches to deposit exploration, new beneficiation technologies and, undoubtedly, compliance with ecological safety standards will give this country an opportunity to become a world leader in the gold mining industry within a limited period.
In this context, the solution of the problem of social and economic development of Siberia and the Far East appears of extraordinary importance to this country.

Development of Energy and Transport Infrastructure for Territory Utilization

It is evident that for many decades and, as I hope, centuries to come Siberia and the Far North will be the major territories in this country related to the mining industry. Today, when this country’s investment attractiveness is substantially increased, investments into geological exploration and construction of new enterprises are significantly rising.

The most complicated problems for successful development of territories are the problems of transport and energy. In this vein, it appears reasonable for the state authorities to work out and start implementing a complex program of developing transport and power communications in Siberia at the expense of the national budget and also based on government and private companies’ partnership.

During the last three years analysts to a certain extent dramatize the decrease of gold output in Russia. It should be pointed out that this decrease happens due to alluvial gold mining. In 2006, alluvial fields produced 62 tons of gold as against 94 tons in 1996, i.e. the gold output decreased 35% (32 tons) in the course of 10 years.
Alluvial gold mining in the Russian Federation is traditionally practiced in under-populated areas of Siberia, the Far East and the Far North. Alluvial gold is mined there mainly by small businesses (their output reaching up to 100 kg a year). Gold is mined on small-scale deposits, their reserves ranging from several kilos to the first hundreds of kilos, and mainly from off-grade reserves and from the mining fields with worked-out balance stocks, as well as from technogenic deposits of low gold content (for instance, the alluvial gold content is 200 mg per 1 cubic meter of sand).
Financially, the major part of small businesses is loss-making, since they are viewed by the state authorities in relation to subsoil usage as equal to large companies and are taxed in the same way. This is why setting up conditions for stimulating alluvial gold mining efficiency is very important for under-populated areas of Siberia, the Far East and the Far North.

In conclusion, let me say that from the point of view of lode gold, the gold mining industry was developing very successfully in the past eight years and the total gold output in Russia may reach over 300 tons per year by 2017-20 if the above mentioned problems will be successfully solved.
Thank you for your attention.

Moscow, GEOMINEX-2008