Russian gold mine — Cyprus to develop Russian bet

A joint venture formed by a unit of Cyprus Minerals (NYSE) and five Russian partners has won a bid to develop a gold mine in the Madagan region of far-eastern Russia.

The advanced Kubaka mine project will be capable of producing up to an estimated 340,000 oz. annually for eight years, based on preliminary data from Russian and Cyprus geologists. A second gold property, Evenskoye, is being evaluated by the joint venture.

Cyprus performed extensive exploration and technical assessment studies “which confirm that these deposits could be among the lowest-cost producers in the world,” said President Milton Ward. But he noted there are still hurdles to be cleared, including negotiating a mining licence and arranging financing.

Development and construction of a mine at Kubaka could take between 12 and 18 months and cost about US$100 million to build, Cyprus estimates. The construction would result in 500 jobs while the mine would employ up to 250 people once operations began.

“This is the kind of international joint venture we look for — a government-approved venture with local partners which is profitable for all partners, the host government and Cyprus,” Ward stated.

A combined open-pit and underground operation is envisaged. However, much work remains to be done before mine planning can begin in earnest, said Cyprus spokesman Michael Rounds.

Based in Colorado, Cyprus is a major producer of copper, coal and lithium which plans to merge with Amax (NYSE).

Cyprus continues to reduce costs at its Sierrita copper mine, south of Tucson, Ariz. The program, part of an effort started last year to cut production costs, has acquired some urgency in light of weaker copper prices. The workforce at Sierrita was recently cut by about 220. Other cost-cutting measures include modifying the haul truck fleet, adding computers to mine operations, and restructuring maintenance.