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Polymetal announces two transactions

24th April 2018

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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JOHANNESBURG (miningweekly.com) – LSE-listed gold miner Polymetal on Tuesday announced two transactions which, when completed, would increase its ownership in the Nezhda and the Prognoz gold properties to 100%.

Polymetal has exercised its call option to acquire the remaining 75.3% in the Nezhda property located in north-east Yakutia, from Ivan Kulakov’s investment vehicle for $144-million in shares.

The transaction is expected to be completed by the end of 2018, at which stage Polymetal also plans to present a detailed development plan for Nezhda. A feasibility study is expected to be completed in the fourth quarter and first production is expected in 2022.

The Nezhda deposit is Russia’s fourth largest. The company expects average production of 150 000 oz/y of payable gold in concentrate with all-in sustaining cash costs in the range of $650/oz to $710/oz of gold equivalent.

“This deposit is a low-risk asset that provides the company with the opportunity to realise superior returns on invested capital. High reserve grades and a long life-of-mine will ensure these returns are robust even in the event of a significant decline in gold prices,” said Polymetal CEO Vitaly Nesis.

In a separate transaction, Polymetal acquired a 50% stake in the Prognoz silver property for $140-million shares, taking its ownership to 100%.

Polymetal has also committed to pay a net smelter return (NSR) royalty in the range of 0.5% to 2.5%, pro-rated to the 50% stake being acquired and capped at $40-million. The royalty will only be payable if the silver price is US$19/oz or higher, with the actual royalty rate within the range determined on a progressive scale dependent on silver price.

Prognoz is the largest undeveloped primary silver deposit in Eurasia with an indicated and inferred resources of 292-million ounces at 586 g/t silver. Project activities for 2018 include 46 km of diamond drilling and extensive in-house metallurgical testwork. An updated resource estimate is expected in the fourth quarter.

A prefeasibility study and reserve estimate will be announced in the third quarter of 2019; with a feasibility study and reserve update to follow in the fourth quarter of 2020, paving the way for a potential investment decision the following year.

Subject to the positive investment decision, full run-rate of production could be achieved in 2024.

Prognoz, in time, would supplant Polymetal's Dukat as one of the leading silver mines globally.

Edited by Creamer Media Reporter

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