ASTANA (TCA) — Polymetal International plc has entered into a binding agreement with Kazzinc LTD, a subsidiary of Glencore plc, for the acquisition of Orion Minerals LLP, the holding company for the Komarovskoye gold deposit in Kazakhstan, Polymetal said on April 4.
London listed company Polymetal is a leading precious metals producer in Russia, Kazakhstan and Armenia.
Komarovskoye is located in the north-western Kazakhstan, 10 kilometres from the city of Zhitikara (population 35,000) and approximately 187 kilometres by rail from Polymetal’s Varvarinskoye mine. The total area of subsoil licenses at the project is 104 square km.
As of 31 December 2015, JORC compliant inferred resources were estimated at 28 Mt at 1.5g/t gold containing approximately 1.4 Moz1. Resources are estimated only to the depth of 280m, while mineralisation is traced to the depth of 450m.
The asset comprises an active open pit mine and a 500 ktpa heap leach facility with grid power available on site. Mining at the property commenced in 2006 and has been focused on the oxide mineralization, which now is largely depleted. Over 200 Koz of gold was produced so far.
The acquisition of Komarovskoye is in line with Polymetal’s processing hub strategy and provides a high grade, open-pittable and easily accessible ore feed for Varvarinskoye mine with simple and well-understood metallurgy.
Polymetal aims to mine, deliver by rail and process at Varvarinskoye mine up to 1 Mtpa of ore with potential to increase the mine’s annual production by approximately 70 Koz at lower cash costs.
The initial investment is expected to be less than US $5 million as mine fleet will be mostly transferred from Varvarinskoye (Varvara) mine and complemented by contractors. Ore processing at Varvara plant is expected to start within three months after transaction completes.
“Komarovskoye has long been in our sights as a natural close fit for our Varvara hub. We are very excited about the transaction which is expected to strengthen production profile, lower costs, and provide substantial incremental cash flows at Varvara in the near term,” said Vitaly Nesis, Group CEO of Polymetal.
The total consideration payable to Orion at completion is US $100 million in cash. In addition, Kazzinc will receive a deferred consideration (Royalty) linked to future production from the Komarovskoye and future gold price performance.
The acquisition is expected to complete in 2016.