30 Sep 2009 19:12

Russia's Polymetal expects to close purchase of Varvarinskoye deposit in Oct

MOSCOW. Sept 30 (Interfax) - Russia's top silver producer Polymetal is planning to finalize its purchase of the Varvarinskoye gold and copper deposit in Kazakhstan and receive permission to close a deal on the purchase of the Mayskoye deposit in Chukotka in October 2009, Polymetal general director Vitaly Nesis said during a conference call on Wednesday.

Polymetal has only to receive permission from the Kazakh antimonopoly authorities to finalize the purchase of the Varvarinskoye deposit, he said. "Kazakhstan's antimonopoly commission is to meet on October 9. If the meeting takes place, we will be able to close the deal by October 15.

It was reported earlier that Polymetal is buying the Varvarinskoye deposit from Orsu Metals for $8 million in cash payable upon completion, and deferred consideration of up to a maximum of $12 million (plus any deferral interest), contingent on and calculable in reference to future prices of gold and copper. The deal is estimated to be worth $235 million.

The company needs to receive approval from a commission on foreign investment in strategic industries to close the purchase of the Mayskoye deposit. Nesis said the commission is to meet in October and the Mayskoye deal is on the agenda for the meeting. He said the Mayskoye deal would be finalized after Polymetal registers an additional share issue.

Polymetal has already acquired a 9% stake in the Mayskoye deposit from a subsidiary of Highland Gold. The remaining 91% was simultaneously purchased by four Russian companies not affiliated with Polymetal or Highland Gold. After receiving permission from the appropriate regulators, Polymetal plans to buy this stake for $95.55 million in cash, or 15.925 million common Polymetal shares plus cash payment for adjustments related in re-capitalization.