Baku, Azerbaijan, Sept. 3
By Elena Kosolapova - Trend:
The Board of Directors of Russian Polymetal International PLC decided to reorient from Russian gold fields to fields in Kazakhstan, the company reported on Sept.2.
"Following the forthcoming acquisition of the Kyzyl project [in Kazakhstan], the Board has decided to re-prioritize the company's internal project pipeline in order to focus capital and management resources on key priority projects and maintain a prudent level of leverage," the company said.
The company will terminate the development of the Albazino expansion project and slow the development of the Kutyn gold project and Maminskoye gold project but proceed with the construction and development of the Svetloye gold project in Russia.
Svetloye gold project is a 1 million tonne per year open pit heap leach operation with initial mine life of eight years. It is a capital-light, low-risk project, which will provide low-cost production and cash flows in the medium-term. Production is expected to commence in the third quarter of 2017 and is expected to run at nameplate capacity for the first full year. Svetloye is expected to add 70,000 ounces of gold to production at an average all-in sustaining cost of $750-800 per ounce. Pre-production capital expenditures are estimated at $90 million.
In mid- August, the shareholders of Polymetal approved the acquisition of Altynalmas Gold Ltd, the holding company for the Kyzyl gold project.
The Kyzyl gold project comprises the Bakyrchik and Bolshevik gold deposits and is located in northeastern Kazakhstan. The acquisition will increase Polymetal's gold equivalent reserves by approximately 50 percent. Bakyrchik contains 6.7 million ounces of gold maintaining 7.5 grams of gold per tonne, and its life will reach 20 years.
Polymetal has entered into binding agreements with Sumeru Gold B.V. and Sumeru LLP for the acquisition of Altynalmas Gold in May.
The company conditionally agreed to purchase the entire issued share capital of Altynalmas Gold from Sumeru, together with Shareholder Debt owed by Altynalmas Gold to Sumeru.
The consideration for the acquisition of Altynalmas Gold and related shareholder debt comprises an initial consideration of $318.5 million in cash and the issue of new Polymetal shares with an aggregate value of $300 million, as determined in the binding agreements and deferred additional cash consideration up to an agreed cap to a maximum of $500 million.
Polymetal expects to fund the cash element of the initial consideration from its available undrawn facilities currently totaling $1.3 billion. The company expects to finance the projected capital expenditure with project finance debt and cash flows generated from its existing operations.
The acquisition of Altynalmas Gold is conditional upon receipt of the required regulatory approvals and fulfillment of other conditions, and is expected to be completed in the fourth quarter of 2014.
Polymetal plans to start production at the Kyzyl Project in 2018 upon completion of the feasibility study.
Edited by C.N.
