Yevgeny Prigozhin's admission is yet another sign that Russia’s war effort in the Donbas has stalled, as the first anniversary of the invasion next month approaches.
During a grim New Year’s visit to the eastern Ukrainian city of Bakhmut, Mr Prigozhin, an ally of President Vladimir Putin, appeared largely unfazed as he inspected mounds of body bags holding his deceased fighters.
The oligarch, 61, was filmed in a makeshift morgue where the extent of Russia’s losses on the battlefield was laid bare.
He could be seen blessing himself as he shone a torch on to the exposed and wrapped remains of his men, many of whom are believed to be convicts. Black body bags could be seen piled on top of one another to shoulder height in the corner of one room.
“Their contract has finished, they will go home next week,” Mr Prigozhin can be heard saying, adding: “These are getting ready to be sent. We all work during New Year’s Eve.
“Here lie Wagner fighters who died at the front. They are now being put in zinc coffins and they will return home.”
In another scene in footage published by his own media outlet, the Wagner chief can be seen looking on as more bodies are loaded from a lorry on to stretchers.
“So long, guys. Happy new year!” he can be heard saying.
Bakhmut has in recent months endured some of the heaviest clashes between invading forces and troops loyal to Kyiv.
The Wagner Group of paramilitaries is leading Russia’s attempt to capture the city, which Mr Prigozhin previously referred to as the “Bakhmut meat grinder”.
In an interview with Russian state TV on Tuesday, he admitted troops were sometimes fighting "several weeks for a single house".
“Everyone wants to know when we will capture [Bakhmut],” Mr Prigozhin told state media. “[But] every house has become a fortress. Our guys sometimes fight for more than a day over one house. Sometimes they fight for weeks over one house. Every 10 metres there is a defensive line.”
The businessman is known as “Putin’s chef” after the president attended numerous dinners hosted by his restaurants and catering businesses.
The Wagner Group first appeared in Ukraine in 2014 when its fighters were part of Russia’s annexation of Crimea.
Meanwhile, Russia has revised its death toll from a Ukrainian strike on a building housing soldiers in the Makiivka. Officials say 89 soldiers died in the blast, after previously claiming 63 lives were lost. Kyiv has said the death toll is likely to be as high as 400.
The New Year’s Eve attack on the Russian-held town near Donetsk city hit a building being used as accommodation for occupying troops.
The Russian military blamed the unauthorised use of cell phones by soldiers for enabling the Ukrainians to pinpoint their position.
Lt Gen Sergei Sevryukov said on Tuesday evening that signals transmitted from mobiles had allowed Kyiv’s forces to “determine the co-ordinates of the location of military personnel” and launch a strike. He said the military is taking unspecified measures to “prevent similar tragic incidents in the future”, as he vowed to punish officials responsible for the blunder.
The attack, one of the deadliest on the Kremlin’s forces since the invasion was launched, occurred one minute into the new year, according to Lt Gen Sevryukov.
Ammunition may also have been stored there and probably contributed to further damage, according to British intelligence.
“Given the extent of the damage, there is a realistic possibility that ammunition was being stored near to troop accommodation, which detonated during the strike creating secondary explosions,” the UK’s Ministry of Defence said.
“The building was only 12.5km from the Avdiivka sector of front line, one of the most intensely contested areas of the conflict.
“The Russian military has a record of unsafe ammunition storage from well before the current war, but this incident highlights how unprofessional practices contribute to Russia’s high casualty rate.”
As the fighting drags on, German Foreign Minister Annalena Baerbock said there is little sign that Mr Putin plans to end the war any time soon “despite all international efforts”.
“The Russian president started this brutal war of aggression and he alone can end it,” Ms Baerbock said in an interview with news website Table Media.
“If Russia stops bombing and withdraws its soldiers, we will have peace.”
The Russian leader is planning to hold talks with his Turkish counterpart, Recep Tayyip Erdogan, on Wednesday, Interfax reported, citing Kremlin spokesman Dmitry Peskov.
Since Russia’s invasion of Ukraine last February, Mr Erdogan has sought to play the role of intermediary between Moscow and Kyiv.