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RUSSIAN GOLD Table 3: Gold Production by Russia's Top 10 Companies in 2009-2012 (mt) 1. Polyus Gold 2. Petropavlovsk Plc 3. Polymetal 4. Chukotka Mining and Geological Co 5. Nordgold 6. Highland Gold 7. Yuzhuralzoloto Group 8. Visochishi 9. Sovrudnik 10. Susumansky Gold Total for Top 10 Total for Russia 2009 038.0 014.8 009.2 025.5 009.8 005.1 005.2 003.4 003.2 001.6 115.8 178.4 Currently, the top five players account for more than 50% of the total level of mining in the country. Experts from the Ministry of Subsurface Resources predict the consolidation in coming years will continue with the acquisition of small and medium enterprises by the largest companies. As a result, by 2020, the top five Russian gold mining companies could account for more than 65% of the total volume of mining. In total, the Russian industry currently comprises 400 gold mining companies. The top 26 companies account for more than 80% of the total market share. Also, by the end of this decade, the share of production of placer gold is expected to decline from its current 30% to 25% because the state does not fund exploration of placer deposits. At the same time, the share of hard rock gold mining will rise to 75% (from the current 70%). However, it is predicted that stable growth will be achieved in both segments, attributed mostly to recent developments of mining in the Sukhoi Log gold deposit, one of the largest in the country and the only one that still belongs to the state. Currently, Russia doesn't have undistributed deposits with significant gold reserves, which has led to the expansion of company activity abroad (Polyus Gold to Kazakhstan; Petropavlovsk to Venezuela and Guyana; Polymetal to Milling facilities at Polyus Gold's Olimpiadneskay mine. 68 E&MJ; • JUNE 2013 2010 039.6 013.9 010.0 019.9 009.2 006.2 004.8 003.7 003.5 003.1 113.9 178.1 2011 042.8 021.2 011.9 016.0 010.5 005.7 005.1 004.4 003.5 003.0 124.1 188.7 2012 048.8 022.1 015.2 014.5 010.2 006.7 006.5 005.2 004.0 003.7 136.9 212.0 Changed Compared to 2011 (%) +13.9 +13.0 +39.0 -7.8 -5.0 +18.0 +27.0 +18.6 +12.0 +13.5 +10.3 +7.4 Kazakhstan; Highland Gold to Kyrgyzstan; and Severstal to Kazakhstan, Burkina Fassi and Guinea). Medium and small gold deposits are not of interest to large companies unless they are located in the immediate vicinity of their production assets. As a result, large companies have begun a gradual sale of their non-core assets to the smaller companies, which will result in an increase in the number of small companies in the Russian market in coming years. Paradoxically, this trend will occur in parallel with the consolidation of the industry. Gold Mining and Investment by the Largest Companies In first place among Russian gold miners is Polyus Gold, which increased 2012 gold production in Russia by 13.9% to 1.569 million oz/48.8 mt compared with 2011. Mining from deposits in the Krasnoyarsk region provided Polysus Gold with 1,171,000 oz/36.4 mt of gold; the Olympiada mine provided 653,000 oz, with Blagodatnoye adding 401,000 oz and Titimukhta, 117,000 oz. In the Irkutsk region, the company mined 260,000 oz/8.1 mt of gold. The Verninskoye mine produced 46,000 oz, while the Alluvial deposits produced 214,000 oz. In Yakutia, the Kuranakh deposit produced 138,000 oz of gold. The total level of gold mining in 2012 for Polyus Gold, including its assets in Kazakhstan, increased by 12% to 1.68 million oz/52.25 mt in a year-on-year comparison. The company's revenue rose 22% to $2.8 billion. By the end of 2013, the company expects to produce 1.7 million to 1.8 million oz/53-56 mt of gold in total and 1.59 million to 1.68 million oz/ 49.5-52.2 mt, excluding assets in Kazakhstan. In 2012, the group of companies comprising Petro increased gold mining by 12.7% to 710,400 oz/22.1 mt compared with 2011. Mining in the Pioneer deposit declined 7.1% to 333,600 oz/10.38 mt, while in Malomyr it increased 16.7% to 103,300 oz/3.2 mt. At the Porkovskay deposit, mining grew 0.3% to 92,100 oz/2.86 mt, and at Albyn, mining grew 89,300 oz/2.78 mt vs. 1,100 oz a year earlier. Gold mining in the Alluvial deposits rose 2.8% to 92,100 oz/2.86 mt. The group's main assets are concentrated in the Amur region in far eastern Russia. By the end of 2013, the company plans to mine 740,000 to 780,000 oz/23-24.3 mt of gold. www.e-mj.com