Polymetal announces Russian-Kazakh asset swap, completes Prognoz investment

The FTSE 250 firm said that, as a result of the transaction, Polymetal would receive 85% of the licence holder for the copper-gold East Tarutin deposit located in Kazakhstan, LLP Tarutinskoye.

In return, it would transfer 100% of Vostochny Basis LLC, the license holder for the copper-gold Tarutin deposit located in the Russian Federation.

The transaction was described by the company as a plain asset swap, and would not entail any additional payments or deferred considerations.

It was expected to close in the second quarter of 2018, and remained subject to statutory approvals and other customary condition.

The East Tarutin licence area, totalling 66.4 square kilometres is situated in the Karabalyk municipal district of the Kostanay region and formed the eastern extension of the mineralised trend stretching across the border between Russia and Kazakhstan.

Polymetal said the deposit was of the copper-gold skarn type, with vein-disseminated mineralisation.

The infrastructure in the region was said to be well-developed, with easy access to the electricity grid, the railway and paved highways.

Previous owners had completed 18 kilometres of diamond drilling at the property.

JORC-compliant mineral resources for the property were estimated at 6.4 Mt of ore at 1.06% copper and 0.07 g/t of gold, or 354 Koz of gold equivalent.

The Tarutin licence area, totalling 1.8 square kilometres, had been partially owned by Polymetal since 2013.

It consolidated 100% interest in the property in January last year.

The GKZ reserve estimate for the deposit comprised roughly 4.6 Mt of ore at 1.39% copper and 0.09 g/t of gold, or 333 Koz of gold equivalent.

Polymetal said the transaction was synergistic for both parties, due to the improved logistical fit of the properties with the existing processing facilities.

East Tarutin was situated on the same side of the border as the Varvara processing plant, and as a result, ore haulage distance was reduced to 110 kilometres, compared to 150 kilometres for Tarutin on the other side of the border.

In the 2019 financial year, Polymetal said it planned to resume exploration at East Tarutin, completing a JORC-compliant reserve estimate in the first half of 2020.

“East Tarutin represents a much better fit for Polymetal in terms of logistics and potential size of reserve,” said Polymetal group CEO Vitaly Nesis.

“This asset swap simplifies operational management of the Varvara hub and avoids the complications of cross-border ore shipment while preserving significant exploration optionality.”

At the same time on Monday, Polymetal confirmed that the previously-disclosed acquisition of a 45% stake in the Prognoz silver property from Polar Acquisition completed on 13 April, following the receipt of all required regulatory approvals.

As a result of the transaction, Polymetal now held a 50% interest in Prognoz.

“Prognoz is a large world-class deposit and the largest undeveloped primary silver deposit in Eurasia with JORC-compliant indicated and inferred resources of 292 Moz at 586 g/t silver,” Polymetal explained in its statement.

The total consideration for the 45% stake in Prognoz at completion comprised $72m, paid through the issue of 6,307,000 new ordinary shares.

Details of the transaction were first supplied in a press release on 19 February.