Deals
Polymetal agrees to acquire Maminskoye gold deposit
Polymetal International plc (LSE: POLY) (together with its subsidiaries, including JSC "Polymetal" - "Polymetal", the "Company", or the "Group") is pleased to announce that its wholly owned subsidiary JSC Polymetal has entered into a binding memorandum of understanding with Vitalex Investments Ltd and Arrowline Investments Ltd to acquire a 100% interest in ZAO "Maminskaya Gornorudnaya kompania"("MGK"), which holds an exploration and mining licence for the Maminskoye gold mining field ("Maminskoye") valid until 2023 (the "Transaction"). The agreed enterprise value of MGK is US$95.5 million.
The total consideration payable for the shares in MGK at completion of the Transaction is equal to approximately US$77.2 million, being the agreed enterprise value reduced by the amount of debt of MGK outstanding at completion (estimated to be US$18.3 million). The consideration will consist of US$3.9 million payable in cash, with the balance of US$73.3 million payable in Polymetal's shares. The exact number of Polymetal shares to be issued to the sellers will be based on the weighted average price of a Polymetal share on the London Stock Exchange in US dollars during the 30 calendar days prior to completion. Completion of the Transaction is conditional on prior approval by the Federal Antimonopoly Service of the Russian Federation, completion by MGK of the acquisition of the site as described below, and necessary MGK lenders' consents. The long-stop date for satisfaction of these conditions is 30 April 2013.
Maminskoye is located in the Sverdlovsk region of Russia, approximately 70 km from the regional capital Yekaterinburg and 30 km from the city of Kamensk-Uralsk (population 130,000). Polymetal's Voro operating mine is approximately 450 km to the north. The 17.8 sq km licence area is accessible by a paved highway and is adjacent to a 10 kV power line. At completion, MGK will own a 1205 ha (2978 acre) site which covers the potential mine, processing facilities, and waste rock stockpile.
Gold was first discovered in the area in 1933, but no systematic exploration took place until 1986. Between 1999 and 2012, 447 diamond drill holes covering a total length of 46 km were made on the property. Free-milling quartz and quartz-carbonate mineralization occurs as a series of stacked lodes with varying dip and an average thickness of 6-10m. Ore bodies outcrop on the surface. All potential future mining will be by open pit.
The probable ore reserves at Maminskoye have been estimated by Snowden in accordance with JORC guidelines at 12.2 Mt of ore at 1.9 g/t gold representing 0.7 Moz of contained gold. Mineral resources (additional to reserves) were estimated at 5.1 Mt at 1.9 g/t representing 0.3 Moz of contained gold. These estimates were prepared for the previous owner and are based on construction of a CIP mill on site. Ore bodies have been drilled out to a depth of 200-250m and remain open at depth and along strike in one direction.
Polymetal believes that heap leaching is the preferable option to treat mineralized material at Maminskoye, as it is expected to be significantly less capital intensive and likely to result in lower unit operating costs. Lower costs, in turn, may permit expansion of both resources and reserves. Extensive test work is ongoing to determine the optimum parameters (crushing size and stacking height) for heap leaching at the property. Scoping study-level estimates indicate the potential for a 2-3 Mtpa operation yielding 80-120 Koz of gold per year.
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