15 Feb 2010 15:03

Regulator clears Polymetal to merge two Magadan subsidiaries

MOSCOW. Feb 15 (Interfax) - Russia's Federal Antimonopoly Service (FAS) has cleared silver and gold miner Polymetal to merge two subsidiaries in the Magadan region, where the company has a number of small to medium size high-grade deposits.

The request to merge CJSC Ayaks and CJSC Silver of Magadan was filed on January 12, the regulator said in a statement.

Polymetal was not immediately available for comment, but the company has said its development strategy involves setting up a number of regional processing hubs.

Polymetal has said that the rationale to create these hubs is to overcome high capital expenditure, a lack of skilled labor and infrastructure restrictions to create single processing facilities with multiple feed sources. The hubs would achieve significant capex savings and would enable the company to leverage regional synergies.

The Omolon Regional Hub will include the Lunnoye and Dukat silver mines, operated by Silver of Magadan; Goltsevoye, operated by Ayaks, which Polymetal bought from Ovoca Gold last year for $11 million cash plus 7.5 million shares; and the Birkachan, Oroch, Sopka Kvartsevaya and Dalnyi deposits.

The rationale behind the creation of the Omolon hub is to create an 850 Ktpa CIP plant and 2Mpta heap leach facility. The hub is intended to achieve synergies with Dukat operations in terms of human resources, supply chain and contractors.