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. Last Updated: 07/27/2016

Severstal Buys Its 2nd Gold Project

Miner and steelmaker Severstal continued its foray into the gold sector Thursday, paying 2.6 million rubles ($103,300) for a deposit in the republic of Buryatia.

The Sagan-Gol project is the second 25-year gold license acquired this month by Severstal, the country's largest steelmaker including foreign assets, and follows the company's acquisition of a 22 percent stake in London-listed Celtic Resources.

"We are looking to diversify Severstal's mining business and are looking at attractive opportunities," said Sergei Loktionov, spokesman for the company's mining division, Severstal Resurs.

"Gold projects are attractive," he said.

Gold prices have risen 80 percent in the last three years, hitting a 28-year peak earlier Thursday, but analysts say most of the country's best gold assets were snapped up when prices were much lower.

Severnaya Zolotorudnaya Kompania, a Severstal subsidiary, paid 73 percent over the 1.5 million ruble start price for the Sagan-Gol deposit.

Severstal Resurs said in a statement that Sagan-Gol contained an estimated 60 tons of gold to Russian P1 and P2 classification, which means they have yet to be upgraded to proved and probable.

The license terms dictate that geological fieldwork must begin within 15 months of the award and that a project to start mining gold must be confirmed within 6 1/4 years.

Severstal's main owner, billionaire Alexei Mordashov, said this month that the company saw unrealized potential in Russian gold mining and was considering forming a separate company based on its gold assets.