Olcha gold-silver deposit

RNS Number : 2189T

Polymetal International PLC

11 December 2012

 



Release time	IMMEDIATE
Date	11 December 2012

Polymetal International plc

Polymetal agrees to acquire Olcha gold-silver deposit

Polymetal International plc (LSE: POLY) (together with its subsidiaries, including JSC "Polymetal" - "Polymetal", the "Company", or the "Group") is pleased to announce that it has entered into a definitive agreement with Ovoca Gold Plc. ("Ovoca") (AIM LSE: OVG.L), pursuant to which it will acquire 100% of Olymp Ltd., a Russian legal entity holding the mining and exploration licence for the Olcha gold-silver deposit ("Olcha"), together with all inter-company debt owed by Olymp Ltd., in exchange for 775,000 ordinary shares in Polymetal (the "Transaction").

The mining and exploration licence covers an area of 2.5 square kilometers in the Srednekansk district of the Magadan Region (the Far East of Russia) and is located approximately 215 km from the Lunnoye processing plant and 230 kilometres from the Kubaka processing plant, which belong to Polymetal's Dukat and Omolon processing hubs respectively.

Olcha mineralisation is of the conventional low-sulfide epithermal type, free milling and with very high-grade bonanza-type shoots.

The audited mineral resource estimate of Olcha in accordance with the JORC Code (2004) guidelines is approximately 653 Koz of gold in 9.2 Mt of mineralised material at an average grade 2.2 g/t (at 1.0 g/t cut-off grade). A more detailed breakdown of the Olcha resource is presented below:

	Tonnage	Grade			Content
	Mt	Au, g/t	Ag, g/t	AuEqv, g/t	Au, Koz	Ag, Koz	AuEqv, Koz
Inferred	9.2	2.2	12.1	2.4	653	3,590	713
Total Mineral Resources	9.2	2.2	12.1	2.4	653	3,590	713

Polymetal intends to exploit the deposit using much higher cut-off grade with the objective of generating ore with grade exceeding 10 g/t gold and trucking it to Lunnoye via the winter road. It is currently estimated that approximately 250 Koz of contained gold will be mined under this approach. The Company plans to start open-pit mining in Q1 2014 and processing in Q2 2014.

In line with Polymetal's strategy, the proposed Transaction is expected to:

·      extend LOM at Lunnoye by processing high-grade ore from the new source

·      ensure effective use of open-pit mining equipment and qualified personnel after the cessation of open-pit mining at Dukat and Arylakh in 2013

·      gain exploration upside within the substantially under-explored licenсe area

"Olcha represents a good opportunity to add another high-grade source of feed for the Lunnoye plant. In addition, Olcha is a natural extension of our portfolio of advanced exploration properties in the Magadan Region" said Vitaly Nesis, CEO of Polymetal.

The Transaction has been approved by the Board of Directors of Polymetal and Ovoca and is now subject to approval by the shareholders of Ovoca. The consideration shares will be issued by the Company at completion of the Transaction, which is expected to occur in January 2013. Based on closing price of Polymetal shares on LSE on Monday, December 10, 2012 (which was GBP10.87 per share), the Transaction value is approximately GBP8.4 million, or, using the GBP/US$ exchange rate of 1.6068, US$13.5 million.

CJSC "Sberbank CIB" acts as an exclusive financial advisor to the Company in connection with the Transaction.

Enquiries

Media		Investor Relations
College Hill Leonid Fink Tony Friend	[phone]	Polymetal Maxim Nazimok Evgenia Onuschenko Elena Revenko	[e-mail] [phone] (Russia) [phone] (UK)
Joint Corporate Brokers
Morgan Stanley Bill Hutchings Sam McLennan	[phone]	Canaccord Genuity Andrei Kroupnik Roger Lambert	[phone]

FORWARD-LOOKING STATEMENTS

THIS RELEASE MAY INCLUDE STATEMENTS THAT ARE, OR MAY BE DEEMED TO BE, "FORWARD-LOOKING STATEMENTS".  THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF THIS RELEASE. THESE FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, INCLUDING THE WORDS "TARGETS", "BELIEVES", "EXPECTS", "AIMS", "INTENDS", "WILL", "MAY", "ANTICIPATES", "WOULD", "COULD" OR "SHOULD" OR SIMILAR EXPRESSIONS OR, IN EACH CASE THEIR NEGATIVE OR OTHER VARIATIONS OR BY DISCUSSION OF STRATEGIES, PLANS, OBJECTIVES, GOALS, FUTURE EVENTS OR INTENTIONS.  THESE FORWARD-LOOKING STATEMENTS ALL INCLUDE MATTERS THAT ARE NOT HISTORICAL FACTS.  BY THEIR NATURE, SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER IMPORTANT FACTORS BEYOND THE COMPANY'S CONTROL THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.  SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE COMPANY'S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE COMPANY WILL OPERATE IN THE FUTURE. FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE.  THERE ARE MANY FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENTS ARE BASED

 

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