Polymetal agrees first offtake from Kyzyl development

Polymetal International has signed its first offtake contract for concentrate from its Kyzyl development project in East Kazakhstan, which is expected to begin production in the third quarter of 2018.

Polymetal said the concentrate buyer, one of its established trading partners in recent years, will purchase 50% of Kyzyl's forecast concentrate in 2018, with Polymetal having the contractual option to increase the amount up to 100% of all annual concentrate production.

The FTSE 250 company said it plans to process low-carbon concentrate at the debottlenecked Amursk pressure oxidation facility, but retains the flexibility to direct this material to offtake.

"Commercial terms of the offtake agreement compare favorably with management's original expectations, with the percentage of payable gold in concentrate in line with the project feasibility study, and a better treatment charge than in the recent Mayskoye contracts," Polymetal said.

Polymetal has agreed to deliver the concentrate along the 6,000km rail route to the port of Vladivostok, with the buyer then responsible for shipping the concentrate for further processing at roasters in Eastern China or elsewhere.

"Securing offtake for Kyzyl concentrate at good terms is an important milestone for the project", said Vitaly Nesis, Group CEO of Polymetal. "This ensures the asset will generate significant free cash flows almost immediately after the start of concentrate production".