Americans to invest $100 million in gold mining in Ukraine
The American company, Avellana Gold, has developed a project to extract gold and gold-polymetallic ore in Transcarpathia (Zakarpattia Region of Ukraine), and will invest about $100 million in this project, as reported by the State Service of Ukraine on Geodesy, Cartography, and Cadastre.
The company plans to develop new infrastructure and a development strategy for the Muzhijevo deposit using modern equipment. The old infrastructure of the Muzhijevo deposit limited the capacity of the mine, the production volume has reached 120,000 tons per year.
Investors plan to organize a highly efficient production system aimed at long-term operations with an annual output of 500,000 tons. In order to accomplish this, Avellana Gold plans to include the development of both gold and polymetallic ores. In fact, this will be its new production strategy.
The company is led by Brian Savage, the Chairman of the Board of Directors for Pioneer Management LLC, a private company he founded in 2009 to provide consulting and investments in projects and companies in the natural resources sector.
The Ukrainian office of Avellana Gold is headed by Mykola Gozhyk, who was previously the chief engineer of Zakarpatpolymetal LLC and the director of Saulyak LLC.
In 2014 it was reported that a license for mining at the Muzhijevo gold deposit was owned by the ‘Carpathian ore company,’ which was controlled by the Donetsk businessman, Valery Bredykhin, associate of the former Minister of Internal Affairs, Yanukovych Vitaly Zakharchenko.
However, later that year, the company re-registered and became a private joint-stock company, without changing its name. The new owner, according to the register, became Avellana Gold LTD, registered in New York.
Interfax-Ukraine reported earlier that Avellana Gold bought the ‘Carpathian ore company’ in 2016. Details of the deal were not disclosed.
In April 2017, Ukrainski Novyny reported that Avellana Gold was appealling to the Prosecutor General's Office requesting assistance with reported misinformation attacks regarding the Muzhijevo deposit. According to the CEO, Savage, he is concerned about accusations that the company has links with the former Minister of Internal Affairs, Zakharchenko, and that the acquisition of companies that have special permits for gold mining in the region are illegal.
The investor assures that he did not and does not have any contacts with the former authorities and that the agreement that Avellana Gold signed regarding the purchase of the ‘Carpathian ore company’ fully complies with the law.
The Muzhijevo deposit is the only gold mining area in Ukraine. To date, there are 55 tons of gold, 1 million tons of zinc and lead in the explored reserves. In monetary terms it is worth almost 3.8 billion dollars.
In addition, there is a depository of waste rock which contains 1 ton of mined gold and 4.5 tons of silver. In monetary terms, this is worth about $32 million and $3 million, respectively.