ULAN-UDE, Russia, Oct. 14 (UPI) -- A mining company owned by Russian steel industry oligarch Alexei Mordashov has won a long-sought license for gold exploration in eastern Siberia.
Mordashov's Nord Gold N.V. announced Friday its 85-percent-owned subsidiary, JSC Buryatzoloto, was the winner of an auction for a 25-year exploration license in the Zhanokskaya gold area in the Republic of Buryatia, along Lake Baikul in the southern part of East Siberia.
Nord Gold Chief Executive Nikolai Zelenski said the company will pay $300,000 for the license at Zhanokskaya, located adjacent it existing Buryatzoloto license area.
"The Zhanokskaya field is a geologically promising area located next to our Irokinda mine," he said. "Its ore could in the future feed the Irokinda processing plant, thus leveraging our existing infrastructure. We are very pleased to have acquired this license."
The field is estimated to contain 20 tons of gold in the "P2" Russian resource classification and 40 tons in "P3" resources, the company said.
In 2012, JSC Buryatzoloto produced and sold 108,900 ounces of gold for $173 million, receiving a net profit of $46.5 million, the Russian business daily Kommersant reported.
Nord Gold has been seeking the Zhanokskaya license since 2009.
The local Buryat power utility had repeatedly tried to sell mineral extraction rights to the Zhanokskuyu field since 2006, but each time canceled the auction due to a lack of qualified bidders. In 2009, for example, JSC BuryatZoloto couldn't demonstrate sufficient resources to develop its gold potential, the newspaper said.
But since then, Nord Gold has evolved and boosted its economic clout.
Because the gold deposits in Russia and the Commonwealth of Independent States partners are mainly already divvied up among existing competitors, it has moved overseas to build up its low stocks.
Last month, Nord Gold received a three-year option to join Canada's Columbus Gold Corp. to develop large gold deposits at French Guiana's Montagne d'Or, potentially making it the first Russian gold producer in South America.
Under that deal, the Russian company will take a 50.01 percent stake in the company Sotrapmag Sas, which owns the license for the deposit, which holds an estimated 4.15 million ounces of gold, with a the metal content of 2.2 grams per ton, Kommersant reported.
The $300 million French Guiana project is expected to launch in late 2018, eventually producing more than 100 million ounces of gold per year.
Mordashov, head of the Russian steelmaker Severstal, last year spun off the company's gold-mining assets to form Nord Gold, then took it public on the London Stock Exchange.
Worth an estimated $18 billion, Mordashov is the son of parents who both worked in the Severstal steel mills. He began his career there in 1988 as a senior shop economist and became its chief financial officer in 1992.
In 1996, he was appointed Severstal's chief executive officer, rising to become chairman of its board of directors in 2002.
Mordashov's interests also include timber as owner of the plywood producer Sveza Group.
Last week Sveza announced plans to team with Finland's UPM Kymmene to build a $2 billion pulp mill in the Vologda region 300 miles north of Moscow.
Mordashov told Interfax the mill, expected to produce more than 1 million tons per year, will take up to five years to build, with the exact timing depending on the securing of state and local approvals."
He said Sveza is seeking implement a public-private partnership for the effort, with the state about $200 million in infrastructure costs, tax breaks and government loan guarantees.