Polymetal reaches understanding with Sberbank on $350 mln in financing for Kyzyl
ASTANA. June 15 (Interfax) - Polymetal , Russia's largest silver producer and one of the country's biggest gold miners, has reached agreement in principle with Sberbank on financing for the Kyzyl project in Kazakhstan, the company's CEO, Vitaly Nesis said.
"Concerning financing for Kyzyl, agreement in principle has been reached with Sberbank on financing in the amount of about $350 million. The money is long, about six years. The documents are now being processed," Nesis told reporters at the Astana Mining & Metallurgy conference.
It was reported earlier that Polymetal planned to use project financing and its own money at a ratio of about 50/50 to bankroll the Kyzyl project. It was primarily considering Sberbank, VTB and the Eurasian Development Bank (EDB) as creditors. In April Nesis told the Financial Times that the company is close to an agreement with Sberbank or VTB on financing for $280 million-$300 million.
Initial capital expenditures on Kyzyl are estimated at $328 million, according to the project feasibility study. An additional $69 million will be spent on stripping overburden at the stage of preparations for production in the period from 2016 through 2017. It was reported that Polymetal plans to start full-scale construction at Kyzyl in the second quarter of 2016. Processing will begin in the second half of 2018, and the first year of production at full capacity will be 2019.
The Kyzyl project in northeast Kazakhstan is a major gold deposit with JORC-compliant probable gold reserves of 7.3 million ounces in 29.2 million tonnes of ore graded at 7.7 g/t for Au and resources of 3,1 million oz in 14.2 million tonnes grades at 6.8 g/t.
"In principle, the accessibility of long-term credit financing for mining projects in Kazakhstan is good. I would even say that it is substantially better than in Russia, due to the geopolitical situation. Therefore, our other development projects, in particular, we are buying the Komarovskoye field in the near future, I am confident that we will not have any difficulty in raising financing," Nesis said.
Polymetal is planning to close the deal on the purchase of the Komarovskoye field from Glencore's subsidiary, LLP Kazzinc, in Q3 2016. The total sum of the deal will amount to $100 million. As at December 31, 2015, according to JORC, the inferred reserves of the Komarovskoye field amounted to 28 million tonnes with gold grade of 1.5 grams/tonne (about 1.4 million ounces of gold). The reserves were evaluated only at a depth of 280 meters, mineralization was followed up to 450 meters.
Polymetal, Russia's largest silver producer and one of the country's biggest gold miners, has operations in the Magadan and Sverdlovsk regions, Khabarovsk Territory, Chukotka, Kazakhstan and Armenia.
Polymetal has a listing on the London Stock Exchange (LSE) and the Moscow Exchange . Free float exceeds 50%. Polymetal's largest shareholders are Alexander Nesis's ICT Group with 23.95%, Petr Kellner's PPF Group with 16.61% and the family of Alexander Mamut with 10.15%.
