Gold mining and production output in 2006 in Russia decreased by 2.2% in comparison with this in 2005 and became equal to 164.3 tonnes. The gold output decreased by 2.9% (to 147.6 tonnes), and the accompanying and secondary gold production volume increased by 4.4% (to 16.701 tonnes).
The essential part of the gold output (98.9%) was provided by 14 leading gold-mining regions with their annual output of more than 1 tonne.

The Kamchatka Region (including the Koryak Autonomous District) joined this group of regions in 2006 (table 1 below).

The gold output increased in the Krasnoyarsk territory, Sakha Republic, which took the second place for the first time in Russia and the Sverdlovsk Region.

At the same time, the gold output was reduced in most regions particularly in the Magadan Region, Khabarovsk Territory and other constituents of the Russian Federation (table 2 below).

Russia Gold Output

The gold output was reduced mostly because of the decline in placer gold production and actual capacities withdrawal at the companies developing primary gold deposits.

In 2006, Russia kept the sixth place in the world rating of main gold producers (table 3).

One of the leading gold-mining Russian companies is still the Polyus Zoloto JSC and Polimetall JSC. The Rudnik Aprelkovo, Kamgold JSC, Seligdar mining partnership, Vasilyevsky and Pokrovsky rudniks and other companies essentially increased the gold output (table 4).

The Polyus Zoloto JSC increased its gold output by 16.1% and sold the 20% Gold Fields stockholding for $2 billion in 2006. It acquired three gold-mining assets of the Al-ROSA investment banking firm in the Sakha Republic and arranged all legal actions related to these assets, finished the prospecting of the Natalkinsky deposit, which is the largest in Russia (the reserves are approved by the State reserves committee's protocol #1320 dated 27 December 2006), twice increased the JORC reserves, approved the long-term development strategy, according to which the Polyus Zoloto JSC is to become one of the five largest world gold-mining companies by 2015.

The Polimetall JSC increased its gold output by 7.4% in 2006, finished the creation of the infrastructure that was needed to start developing the Arylakh silver deposit in the Magadan Region, discovered the Anenskoye gold deposit in the Krasnoyarsk Territory and began appraisal work on the Albazino gold-bearing placer in the Khabarovsk Territory.

The Polimetall JSC is one of the largest silver producers in Russia. In accordance with the 2006 results the company reduced its silver production by 8.6% down to 538.4 tonnes (in 2005: 589 tonnes) which was connected to the reducing of mean silver content in the ore at the Lunnoye and Khakandzhinskoye deposits. In accordance with the company data the silver production on all its units in 2006 was equal to: the Serebro Magadana CJSC (the Dukat deposit): 392.2 tonnes; the Serebro Territorii CJSC (the Lunnoye deposit): 81.0 tonnes; the Zoloto Severnogo Urala CJSC (the Vorontsovskoye deposit): 2.6 tonnes; the Okhotskaya gorno-geologicheskaya company (the Khakandzhinskoye deposit): 62.6 tonnes.

The Polyus Zoloto JSC joined the group of traditional issuers at the London Stock Exchange which have gold-mining assets in Russia such as the Peter Hambro Mining Plc [LSE:POG]and Highland Gold Mining Ltd. (Great Britain) [LSE:HGM] and High River Gold Mines [TSX:HRG] (Canada) in 2006. The Polyus Zoloto JSC issued the 1st level American depositary receipts (ADR), conducted their listing in the USA and London and also share listing at the Russian Trade System (RTS) and Moscow Interbank Currency Exchange. In accordance with the Russian Trade System data, the Polyus Zoloto capitalization was about $9.5 bn. at the beginning of 2007.

The Polimetall JSC prepared the initial public offering (IPO) in 2006. The company shares were sold for $7.75 within the limits of the IPO which was held at the Russian Trade System, Moscow Interbank Currency Exchange and London Stock Exchange. The company's capitalization was equal to $2.23 billion.

The Zoloto Seligdara JSC (the 100% affiliated company of the Seligdar mining partnership issued two series of bonds which cost $800 million rubles in 2006 with the aim of debt financing for the Nizhneyakotinsky gold-bearing placer development in the Sakha Republic.

The Vysochaishy JSC, Angara Mining Pic (owner of 100% shares of the Vasilievsky rudnik CJSC) and Kamgold CJSC which develop the Aginskoye deposit in Kamchatka were conducting preparation work on placing their shares in the alternative sector of the London Stock Exchange.

The essential changes took place in the gold-mining companies?structure in 2006. Thus the number of companies with an output of up to 100 kg was reduced by 28%, and with the output of 100-500 kg decreased by 10% in comparison with that of 2002. The output of these companies decreased over the same period by 28.5 and 16.1%, respectively. The total output of the companies with their own output of up to 500 kg per year decreased by 9 tonnes and became equal to a half of the common placer gold output decrease in 2002-2006 (table 5).

The organizational forms of the gold-mining companies also changed. The number of all-pattern ownership companies reduced in comparison with their number in 2002. The CJSC type companies continued leading the pack in terms of the output. The number of LLC type companies decreased by 40%, the number of JSC type companies by 22% (table 6).

The foreign companies controlled plants?output decreased by 10%. The reducing of the Canadian Kinross Gold Corp.'s output which took place because of the Omolonskaya ZRK JSC went out of business ought to be remarked (table 7). Alongside with that the important event was the Kinross Gold Corp. [NYSE:KGC; TSX:K] decision on buying the Bema Gold Corp. (Canada) [TSX:BGO].

In 2006, 12 plans developing primary deposits provided an increase in gold output of about 9.5 tonnes. Among them are the Polyus ZDK, Kamgold, Vasilievsky, Zoloto Severnogo Urala, Rudnik Aprelkovo CJSC, Aldan-zoloto GRK, Lenskaya ZRK LLC, Pokrovsky Rudnik and Vysochaishy JSC, Chukotka mining partnership producers cooperative and others.

Due to the capacities withdrawal at some companies,. (Omolonskaya ZRK JSC, Amur mining partnership CJSC and others) the gold output decreased by 6.9 tonnes. On the whole, the primary deposits gold output increased by 2.6 tonnes in 2006 (table 8).

The conditions of developing primary and placer gold deposits and their outputs differ dramatically in the Russian gold-mining industry (table 8a).

When subsoil users, developing primary deposits work in stable conditions, annually increase gold outputs and have benefit (positive finance performance) that allows them to spend money on prospecting, subsoil users developing placer gold deposits as a rule have no money resources for prospecting. Annually dozens of this kind of companies which have no money resources neither can start the wash season nor continue their business activities because of their bankruptcy. Placer gold raw materials?base peters out and outputs fall because of insufficient prospecting.

When the projects of developing large-output deposits are successfully realized by huge gold-mining companies almost without any state participation the placer gold production which is conducted by small and medium companies needs state support.

In 2007, the expected placer gold output may reach 55 tonnes; for comparison: annual average placer gold output was 126.8 tonnes in 1976-1980, 110.3 tonnes in 1980-1985, 113.5 tonnes in 1986-1990.

In 2007 in comparison with 2006, a decline in gold mining down to 143.6 (by 4 tonnes) tonnes is expected. The placer gold deposits output will decrease by 7 tonnes more and the primary gold deposits output will increase by 3 tonnes (table 9).

Table 10 shows the record of volumes of gold refined (processed) on Russian gold refineries. The leader is still the Gulidov company in Krasnoyarsk, which refined 48.9% of gold in 2006.

In 2006 refineries produced 3.8 tonnes less measured gold bullions with their total mass of 17.7 tonnes than in 2005 (table 11).

The existence of value-added tax interferes with the measured gold bullions circulation at the Russian gold market.

In accordance with the Russian assay office, there were assayed and branded 37.16 million pieces of jewellery made of gold (this number is 15% more than that in 2005). In accordance with the preliminary estimation the total weight of jewellery pieces contains about 58.3 tonnes of pure gold (this number is 5 tonnes more than that in 2005).

The volumes of exports of gold, platinum and platinum-group metals in 2005-2006 (according to experts?estimation) showed in table 12. The gold exports decreased by 33 tonnes in 2006. The silver exports volume was equal to that in 2005.

The conditions and perspectives of gold-mining industry development in the main gold mining regions in Russia and activities of separate mining companies are characterized below.

Krasnoyarsk Territory

The Krasnoyarsk territory is a leader in gold production since 2003. 31.49 tonnes of gold were mined here in 2006 (table 13). In comparison with the previous year the gold output increased by 9.2%. Meanwhile the primary deposits?outputs increased by 3.39 tonnes (by 12.9%), and placer gold deposits?outputs decreased by 0.72 tonnes (by 29.5%).

In 2006 the Kontinent LLC, Severo-Angarsky JSC and Severnaya ZDC CJSC went out of business. In 2005 they produced 737 tonnes of gold. The Angara mining partnership was divided into three companies: the Angara-Sever, Si-sim and Angara mining partnership LLC.

In 2006 the Polyus ZDC celebrated the 10th anniversary of starting the first company (ZIF-1) at the Olimpiadinskoye deposit. Its capacity has been increased from 300 thousand tonnes to 1.5 million tonnes of oxide-bearing ore per year. The second company (ZIF-2) of the Olimpiadinskoye mining and processing plant with a capacity of 3 million tonnes of oxide-bearing ore per year refines persistent sulphide ore by means of the bioleaching technology.

The perspectives of developing the company are connected with finishing the third stage of building the Olimpiadinskoye mining and processing plant (ZIF-3) in 2007 with a project capacity of 5 million tonnes of sulphide ore per year.

Besides, in 2007, the ZDK Polyus CJSC will start building a mining-and-processing plant with an output of 6 million tonnes of or and 12 tonnes of gold per year at the Blagodatnoye deposit with the project open-cut approved reserves of 222.4 tonnes and average content of gold 2.4 g/t. The opening is scheduled for 2010.

The GRP Polyus CJSC is planning to complete the exploration of the Titimukhta and Olenye deposits with about 40 tonnes of approved reserves in 2007 in order to supply the ZIF-1 plant of the Olimpiadinsky mining-and-processing plant with oxidized ores. The GRP Polyus CJSC is also conducting exploration and evaluation of the Kvartsevaya Gora deposit as well as, Olimpiadinskaya, Panimbinskaya, Zyryanovskaya and Razdolinskaya areas.

The Sovrudnik LLC put into operation a heap leaching system at the Eldorado deposit. At the Sovetskoye deposit the plant extract low-grade ores from the North-East open-cut.

The plant runs its own exploration service, which is now conducting exploration of the flanks of Eldorado and Sovetskoye deposits, as well as Noybinskaya and Aleksandro-Ageyevsky areas. In the near future, the Sovrudnik LLC is going to reach an output of no less than 2.5 tonnes of gold per year.

The Vasilevsky Rudnik CJSC (an affiliate of the Angara Mining Plc) has built a new processing plant rated at 300,000 tonnes of ore per year. In 2006, the reserves of the Vasilyevskoye and Nikolaevskoye deposits were estimated at 34 tonnes of gold. The preliminary estimates of the Partizansky ore cluster promise about 200 tonnes of gold.

In 2007, the company is going to reach an output of up to 1.5-2.0 tonnes of gold per year. The further plans envision the building of a new gold-extracting plant with an output of 1 million tonnes of ore and 4 tonnes of gold per year.

The Priisk Drazhny Mining Partnership LLC was acquired by the Yuzhuralzoloto CJSC in October 2006.

The company is conducting dredge development of the placer deposits in the Severo-Yeniseisky region. At present, the company operates six dredges with balance supplies of 4.6 tonnes (4-5 years).

On the grounds of the performance data collected over the past six years the coefficient of 1.9 was approved for the balance reserves. Taking into account the coefficient and additional increase in reserves due to exploration works, the company will be provided with supplies for the next 15-20 years.

The region is to witness 3.6% gold output increase (up to 35.2 tonnes) in 2007. The Krasnoyarsky Territory's Social and Economic Development Programme makes provision for a gold output of 42 tonnes by 2010.

Republic of Sakha (Yakutia)

Republic's gold output totals 19.92 tonnes in 2006 (table 14), i.e. the output increased by 6% over the previous year. The output of the primary deposits stands for 11.5% (9.91 tonnes) and that of placer deposits is 1.2% (10.01 tonnes).

The GRK Aldanzoloto OJSC (an affiliate of the Polyus Zoloto JSC) is developing the deposits of the Kurnakhanskoe ore field. According to the JORC due diligence dated 01.01.2006 the reserves of the Kurnakhanskaya group of deposits (measured & indicated) totals 203.828 tonnes of gold. According to expert analysis the reserves of the deposit reach 500 tonnes.

The development concept of the company envisages output growth: up to 5.7 tonnes in 2007, 7.7 tonnes in 2008 and 10 tonnes in 2010.

In 2006, The GRK Aldanzoloto JSC gained a license for open and underground development of the Pinigin deposit with the C2 gold deposits of 17.7 tonnes and predicted P1+P2 resources of about 26 tonnes.

The Seligdar Mining Partnership has been involved in heap leaching since 1996. The partnership has been developing the Samolazovskoye and Mezhsopochnoye deposits since 1999 and 2004 respectively. In 2006, the company reached for the first time the gold output of more than 2 tonnes.

In 2006, an affiliate, the Zoloto Seligdara JSC, was set in order to attract extra funding for the Nizhneyakokitsky project. The project is based on the reserves and predicted resources of the Nizhneyakokitskoye ore field (42.7 tonnes of gold with average grade of 1.45 g/t). Commercial production of the deposits is scheduled for 2008.

The Zoloto Seligdara JSC acquired the Ryabinovoye CJSC with the license for development of the Ryabinovskoye deposit (16.6 tonnes of gold). As a result the company will be capable of extracting up to 2 tonnes of gold per year.

In 2007, the Zoloto Seligdara JSC along with the Tekhsnabeksport and Atomredmetzoloto JSCs launched a joint project at the Lunnoye deposit of the Elkonskya group of deposits. According to Tekhsnabeksport data the deposits of 13 of 40 areas comprising the group reach 344,000 tonnes of uranium, while the total predicted resources of the area are rated at 600,000 tonnes of uranium. The ore also contains molybdenum and gold.

The company plans to increase gold output up to 4 tonnes per year by 2010.

The Zapadnaya Mining Partnership OJSC has been holding the license for exploration and development of the Badran deposit rated at 10.8 tonnes of gold since 1997. Operated on the deposit is the modular extraction plant with extraction capability of 100,000 tonnes of ore per year. The plant is shut down in winter. The extraction is of underground type.

The mining partnership is continuing to explore the Badran deposit relying only on its own funds.

The Drazhnik Mining Partnership LLC operates the biggest dredge fleet in the Republic (five dredges). In 2007, the company produced 784 kg. of gold to exceed the target. The 2007 dredge output is planned to be maintained at the level of the previous year.

2006 saw the reconstruction of the processing plant on the Yursky deposit. The works on exploration of the bottom horizons of the Duetskoye deposit are still being carried out.

The Prognozserebro Company (an affiliate of the Buryatzoloto JSC) started the exploration of the Prognoz silver deposit, in 2006. The reserves and the predicted resources of the deposit could total about 10,000 tonnes of silver. 2007 will see the end of exploration works and preliminary technical and economic assessment of commercial production.

The master plan aimed at an increase in gold output in the Republic of Sakha (Yakutia) relays on the three major projects carried out by the Polyus Zoloto JSC. The projects are as follows: the Kurakhansky, Nezhdaninsky and Kyuchussky. The Nezhdaninsky mining-and-processing plant is planed for putting into operation for 2011. The end of the up-rating reconstruction of the Kuranakhsky mining-and-processing plant is scheduled for 2011. The gold output is planned to rise up to 28 tonnes in 2011 and up to 40-45 tonnes in 2020.

Magadan Region

In comparison with the previous year, in 2006, the gold output in the region decreased by 23.8% - down to 17.29 tonnes (table 15). The primary deposits output dropped by 34.2% (down to 6.92 tonnes), while that of placer deposits lowered by 14.2% (down to 10.34 tonnes). The silver output topped 624.4 tonnes.

2006 was a success for the Drazhnik LLC (Susumansky Mining-and-Processing Plant Susumanzoloto JSC), for the first time in the course of the last 15 years the company extracted a record amount of gold: 1035 kg.

The Omsukchanskaya GGK CJSC marked the fifth anniversary of the development of the Dzhulietta deposit. So far the company produced 15 tonnes of gold and 203 tonnes of silver.

The Ducat deposit underwent reconstruction to up rate the gold extraction facilities up to 1.5 million tonnes of ore per year. The Polymetall-UK Company launched a bid to set the new Dukatnoye Exploration Company LLC specialized exploration company.

The Polymetall Engineering CJSC worked out a project of underground development of the Lunnoye deposit. In 2006, the Serebro Territorii CJSC started construction of the #1 tunnel. At the same time the preparation works were conducted at the Arylakh gold and silver deposit. Under JORG the reserves of the Arylakh deposit total 1.3 tonnes of gold and more than 1,000 tonnes of silver. The first metal is planned to be extracted in 2007.

In December 2006 the city of Omsukchan witnessed the public hearings on the development of the Goltsovoye silver and lead deposit. The license for development of the deposit belongs to the Mining Partnership Ayaks CJSC, the affiliate of the UK-based Ovoca Gold Plc.

The exploration works are held at the deposit in order to confirm the reserves of 2.5 million tonnes of ore with the average silver grade of 900 g/t and 3.2% of lead (80,000 tonnes) The beginning of the production is planned for 2008. The output is set at 200 tonnes of the silver per year.

Due to the stoppage of the Omolonskaya ZRK JSC the Magadan Region facilities will be able to produce no more than 17 tonnes of gold, in 2007, with an increase in placer deposits output is not likely. In 2007, the Region is to produce 719 tonnes of silver - 15% more than in 2006.

Khabarovsk Territory

In 2006, the gold output of the Khabarovsk Territory totalled 15.74 tonnes (table 16). The output decreased by 13.65% in comparison with that of the previous year. The primary deposit output dropped by 8.2% (10.4 tonnes), while placer deposit output dropped by 2.9% (5.34 tonnes).

The Millionogovershinnoye CJSC (the gold mining asset of Highland Gold Mining Ltd. lead by the Rusdragmet LLC) stabilized its output at 4.5 tonnes level in 2006.

The development of the company is facilitated by the realization of the Belaya Gora project, the joint project of Highland Gold Mining Ltd. and Barrick Gold [NYSE:ABX; TSX:ABX].

The Belaya Gora deposit comprises a stockwork and a flat deposit. The C2 gold reserves of the stockwork and the flat deposit are 10,064 kg and 3864 kg respectively. The average gold grade is about 1 g/t. Preliminary estimates show that the deposit can be developed by heap leaching method. The gold extraction coefficient is expected to be 70%-75%.

The Amur Mining Partnership CJSC put into operation a processing plant at the Krasivoye deposit (5.5 tonnes of gold) in late 2006. The predicted resources of the deposit are rated at 15 tonnes.

The plant uses gravity-flotation method of processing with an annual output of 200,000 tonnes of ore per year. The resultant concentrates are transported to the Ryabinovy mining-and-processing plant for further processing.

At the same time the mining partnership is building more sophisticated plant on the Tuchky deposit at the Sea of Okhotsk seaside. It will start working in 2007. Both factories will stimulate the growth of gold mining up to 1.0-1.5 tonnes in 2007. It is planned to produce up to 4 tonnes of gold, 3.5 tonnes of alluvial platinum and 8.5 tonnes of silver. The Polimetall JSC purchased 100% of the Resursy Albazino LLC in 2006. The company owns the license to process the Albazino deposit, which field reserves presumably make up 30-35 tonnes of gold.

After prospecting the deposit planned in 2008, it is planned to work out technical and economic assessment to explore it and start mining not later than 2010. According to the preliminary assessments, the investment to build the mining-and-processing integrated works together with the hydrometallurgical plant in Amursk will be about $150-200 million.

In 2007 the Khabarovsk Region plans to increase output up to 17 tonnes.

Irkutsk Region

In 2006 the region's output was 14.54 tonnes of gold. In comparison with the last year the output showed 4.1% decrease with the processing of gold increased by 44.4% (3.59 tonnes), and the alluvial minerals one decreased by 13.6% (10.95 tonne).

In 2006 the Lenzoloto OJSC was reorganized in the ZDK Lenzoloto CJSC, which received control stakes of the following gold mining companies: Svetly CJSC, Lensyb CJSC, Sevzoto CJSC, Marakan CJSC, Nadezhdinskoye CJSC, Dalnaya Tayga CJSC, Charazoto CJSC (the former affiliated companies of the Lenzoloto OJSC).

2006 showed intensive development of the gold mining from primary deposits. Nowadays two gold mining plants are actively working: within the Visochaishiy JSC on the Golets Visochaishy deposit and within the GRK Sukhoi Log Close JSC on the Zapadnoye deposit.

In 2007, it is planned to complete the design of the mining-and-processing integrated works on the Pervenets and Verninskoye deposits. The opening of the plant is planned for 2009-2010.

The Irgiredment Open JSC concluded working out technical and economic assessment and investment characteristics necessary to reconstruct, modernize and develop the Vysochaishy mining-and-processing integrated works for the period between 2007 and 2016 and for the future.

It is planned to increase the mining power of the works up to 5 tonnes of gold by the 2009 and to build new mining-and-processing integrated complex with the mining power of 4 tonnes.

The 2007 seconded-by-the-region-administration-gold-mining-allowance amounted to 16.5 tonnes (2 tonnes more than in 2005), including 4.5 tonnes of mining gold. To specify: At the Vysochayshy JSC factories: 3 tonnes, the Sukhoy Log JSC: 1065 kg, the Tonoda JSC: 160 kg, the Druza LLC: 300 kg (at the Nevskoye deposit).

Amur Region

In 2006 the region extracted 14.49 tonnes of gold. In comparison with the last year the output showed 1.6% decrease with the output of gold from primary deposits increased by 11.2% (6.38 tonnes), and from placer deposits decreased by 9.8% (8.11 tonnes).

The alluvial gold output in the region decreased in almost 2 tonnes At the same time the output of gold from primary deposits has significantly increased.

The Pokrovsky Rudnik JSC ?the affiliated company of the British Peter Hambro Mining ?is the only company in the region to overcome the 6-t barrier (6383 kg). It is the first time in history when a mining company in Priamuriye region showed such a result.

Canadian gold mining company High River Gold Mines Ltd, the 99% owner of the Berezitovy Rudnik LLC, is completing to build the mining plant on the Berezitovoye deposit with 32.6 tonnes of gold and 149.5 tonnes of silver.

It is planned to start the gold mining plant and produce first 300 kg of gold in 2007. After the plant has obtained its rated capacity it will produce more than 3 tonnes of gold annually.

It is also conducted the pre-project preparation to explore the Bamskoye (Polyus Zoloto JSC) and Malomirskoye (Peter Hambro Mining) gold deposits. In 2007 it is expected to process 14.8 tonnes of gold.

Republic of Buryatiya

In 2006 the Republic extracted 9.8% less gold (6.89 tonnes) with 2.3% (4.67 tonnes) less gold from primary deposits, and 7.8% (2.22 tonnes) from placer deposits.

The original gold processing was decreased: the Buryatzoloto (with the major shareholder ?the Canadian High River Gold Mines) on the Irokinda and Zun-Kholba deposits by 3.2% (4.72 tonnes) and the Zapadnaya partnership mine on the Kedrovskaya deposit by 25.9% (up to 0.22 tonnes).

The leading companies of the region decreased the processing on the placer deposits. Among them are the Sininda-1 LLC by 1.9% (down to 556.3 kg), the Starately Karalona LLC by 11.3% (down to 260.5 kg), the Vitimgeoprom JSC by 21.1% (down to 165 kg) and the Tsipikansky Priisk JSC by 49.3% (down to 125.1 kg). It was in 2006 when Republic obtained the mining partnership of the Zolotnik company LLC, processing 114.6 kg of gold.

In 2007 it is at best expected that the processing of gold will remain at the same level.

Sverdlovsk Region

In 2006, the gold output in the region increased by 16.2%, totalling 6.48 tonnes. Mining from primary deposits increased by 24.7% (up to 3.64 tonnes). The main output showed the Zoloto Severnogo Urala JSC (by 35.9% up to 3.143 tonnes). In 2008, the company plans to conclude the Vorontsovskoye deposit plant reconstruction, increasing its power up to 900,000-950,000 tonnes annually.

The output from placer deposits in 2006, if compared with the previous year, increased by 7% (up to 2.84 tonnes). In 2007 it is expected to retain the current level of gold output.

Chita Region

In 2006 the region extracted 6.436 tonnes of gold. In comparison with the 2005 the output showed 0.1% decrease with the extraction from placer deposits decreased by 9.2% (5.211 tonnes), while from primary deposit there was extracted 87.3% more (1.225 tonnes).

The Rudnik Aprelkovo CJSC (Moscow-based Arlan group of companies) has equipped its Pogromillionoye deposit with the new heap leaching facility featuring the power of 1.5 million tonnes of ore per year. The company plans to mine 1 tonne of gold.

The Darasunsky Rudnik (the affiliated company of the Highland Gold Mining Limited) has stopped the extraction after the fire in September 2006. Since November 2006, the plant processed the ore from the mine dumps with low gold tenor. Nowadays a new strategy of the plant is being determined: either reconstruct of active mines or building of a new shaft.

The Novoshirokinsky project is implemented by Rusdragmet LLC (the operator of Highland Gold Mining Limited in Russia) on the Novoshirokinsky gold-metallic deposit.

Highland Gold Mining Ltd. together with Kazakh company Kazzink in 2006 has established the joint company to implement the project.

The opening of the company is scheduled for 2008. It is planned to extract 100,000 tonnes of ore in the first year, 300,000 tonnes in the second and 450,000 tonnes in the third one. It is also planned to increase the mining in future. The annual gold output will rise up to 2 tonnes, silver output 32 tonnes, zinc output 5000 tonnes and lead more than 15,000 tonnes. The estimated investment to put the mining plant into operation is almost $40 million.

The Novoshirskoye deposit ores contain 4.11% of lead, 1.82% of zinc, 5.55 g/t of gold and 101.9 g/t of silver.

It is as far as 45 km from Novoshirokinsky deposit where Vozdvizhensloye deposit is situated. It can be considered as its additional resource base. The 20-year-long license to use the deposit was given in November 2005.

In July 2006, the GK Amazarkan LLC (owned by IF Sakhainvest OJSC) started out the heap leaching facility on the Amazarkan deposit. The first 18 kg of gold were extracted. The official allowance is to extract 200 kg of gold.

The output of the Ksenyevsky Priisk JSC on the Itakinsky deposit was 20 kg of gold.

Chukotsky Autonomous District

In 2006 the region extracted 4.795 tonnes of gold. In comparison with the 2005 the output showed 1.5% increase with the extraction from primary deposits increased by 16.6% (2.367 tonnes), while from placer deposit there was extracted 10% less gold (2.428 tonnes).

The Chukotka Mining Partnership LLC is the oldest company in the region. It made the most significant contribution to the gold mining of the district. Since 2003 the company has been stripping the Valunistoye deposit with 14 tonnes of gold and 140 tonnes of silver while 50 tonnes of gold predictable. The output of 2006 was 2.037 tonnes of gold (42.5% of the whole district output) and 8.9 tonnes of silver.

The Polarnaya Mining Partnership production company is mining the placer gold both in subareal and plain ways on the Kuvet and Ryveem deposits. The output of 2006 was 889.2 kg of gold. This level will retain.

For 17 years of working (since 1990) The Mining Partnership LLC has extracted about 6 tonnes of gold. Recently the company is constantly increasing the output of gold being well along toward the level of 0.5 tonne annually.

The Severnoye Zoloto CJSC renewed mining the Dvoynoye deposit.

In 2007, the Severny Rudny Technology plans to start mining gold on the Klen gold-silver deposit (Bilibinsky district) with 9 tonnes of gold in reserves.

On the Karalveyem deposit the Neolax company is constructing the gold mining plant that is to be opened in 2007.

The Kinross Gold Corp. Company, after finishing transaction to purchase Bema Gold Corp., is implementing the project on the Kupol deposit. The estimated reserves according to the company are 189 tonnes of gold and 2,330 tonnes of silver.

The Rostechnadzor state monitoring department has approved the deposit mining technical and economic assessment. The company plans to start mining on the Kupol deposit in the mid 2008. The output is planned to be increased up to 19-20 tonnes by 2009.

The bank is concluding technical and economic assessment according to which the Highland Gold and Barrick Gold companies will discuss the terms of their cooperative mining of the Majsky deposit.

In the Chukotsky Autonomous District, there is a possibility to increase the gold output up to 10 tonnes by 2010.

In 2007, the output increase was up to 6 tonnes (1 tonne gain) will provide commissioning of new facilities on the Karalveyem and Klen deposits; in 2008 up to 7.0-7.5 tonnes due to commissioning of start up complex on the Majsky deposit; in 2009 up to 14-15 tonnes due to increase of mining power on the Karalveyem and Majskoye deposits and starting mining on the Kupol deposit; in 2010 up to 25 tonnes due to reaching the rated capacity on Majsky and Kupol deposits.

Chelyabinsk Region

The output of 2006 was 3.247 tonnes of gold, which is 1.4% less than in 2005. The majority of output is from primary deposits (3.164 tonnes).

The Yuzhuralzoloto CJSC is the leading company of the Chelyabinsk region and the asset management of the Yuzhuralzoloto group of companies. It includes the Kochkarskaya ZIF, reconstructed with the increase of mining power up to 1.8 million tonnes of ore annually as well as UKV on the Svetloye deposit with mining power of 1 million tonnes of ore annually and on the Bereznyakovskoye gold deposit with mining power of 400 tonnes of ore annually.

The Yuzhuralzoloto CJSC in 2007 plans to start the heap leaching facility on the Zapadny Kurosan deposit featuring the mining power of 300-400 tonnes of ore annually.

The Svetlinskoye deposit with 100 tonnes of gold and 80 tonnes of silver will face building a new plant on the board of the active   open-cut mining. It features average gold grade of 1.5 g/t the plant mining power will be 4-5 million tonnes of ore annually.

The construction is due to begin not later than February 2008. The construction term is 3 years. It will presumably cost $300 million. The launch of the plant will allow increasing output up to 8 tonnes by 2011.

Republic of Tuva

The 2006 output of gold in the Republic increased by 2.4%  (up to 1.797 tonnes) compared with the previous year.

The major mining companies are still Oina and Tuva working on alluvial gold deposits.

The Tardan deposit faces preparation to construct the gold mining plant. The Tardan Gold LLC (the affiliate of the Central Asia Gold) will conduct the process. The mining power of the plant will be up to 100,000 tonnes of ore and 0.8 tonnes of gold annually.

It was in 2006 when the Tardan Gold LLC won the tender to research and conduct mining on the Kara-Beldir gold mining area with predictable P1 and P2 categories resources of 40 tonnes.

The 2007 output of gold in the Republic will retain on the previous year level.

Republic of Khakasyaya

The 2006 showed decrease in gold output by 14.5% (down to 1.533 tonnes). Two major companies: The ZDK olotaya Zvezda CJSC and Kommunarovsky Rudnik OJSC extracted 1.431 tonnes of gold (93.3% out of total volume) from primary deposits.

The ZDK olotaya Zvezda CJSC opened the new Yelovoye primary gold deposit in the North of the Republic (The Ordzhonikidze district) not far from the Sakhalinsky mine. After concluding of the research activities the results (about 5-6 tonnes) will be submitted to the territorial reserves committee.

Due to bridging into service the gold mining facility on the Aginskoye deposit (the Kamchatskaya region) by the Kamgold CJSC (the major shareholder is Koryakgeoldobycha CJSC, conrolled by Renova Group) will allow to increase gold output by 7 times up to 1.36 tonnes.

The Kamgold CJSC plans to reach rated capacity of 3 tonnes of gold annually the Aginsky mining and concentration complex. The company also makes projects of the mining on Ametistovoye, Bolshoi Zolotoi and Baranyevskoye deposits.

The Trevozhnoye Zarevo CJSC (the affiliate of Trans-Siberian Gold structure) is preparing to build the mine. The first ore there can be extracted not earlier than 2008. The geological exploration will continue on the Rodnikovy deposit in 2007.

In conclusion, it is worth noting that 2006 met significant exasperation of mining alluvial gold decrease. As it was underlined above the main reason is lack of geological exploration equipment in small and medium companies working on placer deposits. Russian President Vladimir Putin ordered to develop a number of measures to stimulate exploration of gold deposits. It happened in the city of Magadan at the conference on the situation and prospective of gold mining industry development on November 22, 2005. The presidential order is not accomplishing.

On March 15, 2007, the Ministry of Natural Resources directed to the Government a new project of how to catalyze the geological research of gold deposits. The actual suggestions of the Gold Miner Union of Russia and Gold Digger Union of Russia industrial associations sent to the Ministry of Economic Development, Ministry of Natural Resources, Ministry of Industry and Energy and Ministry of Finance were not even discussed.

 It is considered to be expedient that the problem of gold mining industry should be discussed in co-operation with the Gold Miner Union of Russia industrial association.