Polymetal buying gold project in Kazakhstan for $618.5 mln
MOSCOW. May 22 (Interfax) - Russian silver and gold miner Polymetal is buying Altynalmas Gold Ltd (AAG), the holding company for the Kyzyl gold project in Kazakhstan, Polymetal said in a statement.
The Kyzyl gold project comprises the Bakyrchik and Bolshevik gold deposits and is located in north-eastern Kazakhstan.
The selling parties are Sumeru Gold B.V. and Sumeru LLP, collectively known as Sumeru.
The overall cost of the deal is $618.5 million, including $318.5 million cash and $300 million in new shares.
The deal also provides for a deferred additional cash consideration up to an agreed cap up to a maximum of $500 million, contingent on certain conditions being met and dependent on the relative dynamics of the gold price and the price of Polymetal's shares over up to the next seven years. The additional consideration is intended to compensate Sumeru for any negative difference between the market performance of the consideration Shares and the gold price in the seven-year period following completion of the acquisition.
Polymetal expects to fund the cash element of the initial consideration from its available undrawn facilities currently totaling $1.3 billion.
The acquisition will increase Polymetal's gold equivalent reserves by approximately 50% with a single large high-grade property containing 6.7 Moz gold at 7.5 g/t (JORC), and a life of mine of 20 years based on reserves at Bakyrchik.
Polymetal CEO Vitaly Nesis said at a conference call that the Eurasian Development Bank (EDB) had expressed an interest in funding the Kyzyl project.
He said the capex volume and sources of funding had not yet been finalized.
Polymetal hopes by the end of 2015 to finish appraising the project's reserves and drafting a feasibility study. Construction might begin early 2016 and production, according to preliminary estimates, in 2018.