JV to Develop Major Russian Gold Deposit
Under the agreement, Polymetal may acquire up to 50% in a joint-venture company— JSC South-Verkhoyansk Mining Co. (SVMC)—that will hold the deposit. During Stage 1 of the agreement, Polymetal will obtain a 15.3% interest in the joint venture by investing $18 million in cash, of which $10 million will go to Polyus and $8 million will be used to fund project expenses over a period of 15 months.
Upon completion of Stage 1, Polymetal will have the option of participating in Stage 2 through an earn-in arrangement that will allow it to acquire a 50% interest in the project. Stage 2 investment will total $72 million in cash and will be carried out from month 16 to month 52 from the date of forming the joint venture. Stage 2 investment will be used to finance construction and ramp-up of an underground mine and processing plant.
Polymetal will prepare a definitive feasibility study for the development of the property and will be responsible for engineering and construction management. Upon completion of Stage 2, SVMC will operate as a 50:50 joint venture between Polymetal and Polyus Gold, with Polymetal as the managing partner.
Should Polymetal decide not to proceed to Stage 2, the joint-venture arrangement will terminate after Stage 1 with no further amounts to be paid or received by the parties, and the whole of Polymetal’s interest will be redeemed at nominal value.
Polymetal CEO Vitaly Nesis said, “We believe Nezhdaninskoye fits perfectly with Polymetal’s core competencies in remote asset development, selective underground mining and refractory ore processing. The size of the deposit underscores significant potential for a high-grade mine with a very long mine life.”