Polymetal acquires remaining 20pc of Saum Mining Company

Polymetal International has acquired the remaining 20% stake in Saum Mining Company, the licence holder for the Saum polymetallic deposit with resources of 435 Koz of gold equivalent at 9.7 g/t, it announced on Friday.

The FTSE 250 company said the transaction brought its stake in the property to 100%.

It explained that, following a successful exploration drilling campaign at the property in 2017-2018, it decided to consolidate its ownership in Saum.

The total consideration for the remaining 20% stake comprised $7m paid to a private seller by issuing 834,055 new ordinary shares of the company, representing 0.18% of Polymetal's total increased share capital.

Polymetal said the number of issued shares was determined by dividing $7m by $8.39, the spot price of ordinary shares of the company as at market close on 25 September in US dollars.

The Saum licence covers an area of 34.2 square kilometres in Russia's Sverdlovsk region in the Ural Mountains, and is located 60 km from the town of Ivdel and about 240 km from Polymetal's Voro processing plant.

It said the closest road was 15 km away, with the railway spur approximately 45 km.

Mineralisation at Saum belonged to the classical VMS type.

Thick near-surface tabular ore bodies ensured feasibility of open-pit mining at a relatively low stripping ratio, Polymetal said.

Productive mineralisation remained open down-plunge along the strike.

Saum's oxide ore was free-milling, and would be processed through the existing CIP plant at Voro.

Sulfide ore was “amenable” to conventional flotation followed by cyanide leaching of flotation tails.

The company said it planned to prepare an initial reserve estimate in the first quarter of 2019, with oxide ore mining activities expected to start in the second half of 2020.

“Our strategy at Voro is increasingly focused on extending the life of mine through nearby exploration targets, with the potential addition of a flotation circuit to the existing processing plant,” said Polymetal group chief executive officer Vitaly Nesis.

“Saum fits this vision perfectly.

“High grades and good infrastructure will enable low capital intensity, low costs, and a quick route to free cash flow, which further strengthens the rationale for a flotation project at Voro.”