Polymetal consolidates Tarutin cooper deposit in $10 mln deal
MOSCOW. Jan 31 (Interfax) - Polymetal International plc has fully consolidated its interest in LLC Vostochny Basis, the license holder for the Tarutinskoye (Tarutin) copper deposit in Russia's Chelyabinsk region, increasing its stake from 75% to 100%, the miner said in a statement.
Polymetal has purchased an additional 25% from Gerosena Trading Ltd, the owner of the remaining stake in LLC Vostochny Basis, increasing the Company's interest in Tarutin to 100%.
The consideration comprises $10 million payable by 893,575 newly issued company shares, or 0.2% of Polymetal's issued ordinary share capital following this transaction.
Tarutin is a conventional copper-gold skarn deposit that is "an excellent fit with Polymetal's processing hub strategy," the company said. It is expected to provide an open-pittable and easily accessible ore feed for the Varvara flotation plant located in Kazakhstan, 150 km by road from the mine site.
A reserve estimate for the deposit is expected in Q3 2017, with mining planned to commence in 2018 with the goal to deliver and process up to 300Kt of ore at Varvara in order to produce 4-5 Kt of copper per annum in 2018-2020.
The initial investment is expected to be less than $5 million as the mine fleet will be transferred from Polymetal's existing operations.
"We have decided to consolidate 100% ownership over Tarutin as it is a natural close fit for our Varvara hub and enhances its copper reserve base," said Vitaly Nesis, Group CEO of Polymetal. "Tarutin is expected to start providing cash flows in the near term," he said.
As of the beginning of 2016, Tarutin contained probable reserves of 890,000 million of ore with 14,400 tonnes of copper, 3,000 oz gold and 359,000 oz silver or 93,000 oz gold equivalent.
Polymetal, Russia's largest silver producer and one of the country's biggest gold miners, has operations in Magadan and Sverdlovsk regions, Khabarovsk Territory, Chukotka, Kazakhstan and Armenia.
The company is listed on the LSE and Moscow Exchange, with a free float of more than 50%. Polymetal's largest shareholders are Alexander Nesis's ICT Group with 19.86%, Petr Kellner's PPF Group with 18.55% and the family of Alexander Mamut with 10.13%.