SUKHOI LOG, Russia -- Beneath this plot of land in southeastern Siberia lie vast stores of gold, according to Russia's biggest gold producer, Polyus PJSC , and tapping them could provide the Russian central bank with a huge and nearly sanction-proof backstop for its currency.
Tests commissioned by the company last year and undertaken by Australia-based AMC Consultants, along with a scoping study conducted in 2018, determined that there are 63 million ounces of gold at Sukhoi Log, Polyus has told investors. While independent mining analysts haven't confirmed that estimate on their own, many of them refer to Sukhoi Log as one of the world's largest untapped gold deposits.
"And that may just be the beginning," said Polyus geologist Svetlana Deys. "The gold could extend far beyond the reach of the Sukhoi Log license." Polyus says the prospective mine holds approximately a quarter of all Russia's known gold underground.
The news is good for both Polyus and the Russian government. Unlike other producers that move their bullion on world markets, Polyus sells its gold exclusively to large Russian state banks, which then resell it to the country's central bank. Once mining begins, the bank can use the mine's gold to support its ruble currency or sell it for extra foreign currency in times of crisis.
Gold has become a major holding in Russia's central bank reserves, with its share nearly double what it was in 2014, when the bank started dumping its U.S. Treasury and dollar holdings amid increased tensions between Russia and the U.S.
Last year, the central bank's deputy head, Dmitry Tulin, told lawmakers that while gold prices may fluctuate, "it's a 100-percent guarantee against legal and political risks." ...
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