28.12.2015, 22:48
Polymetal Has Entered Into Joint Venture with OJCS Polyus Gold
OREANDA-NEWS. Polymetal International plc is pleased to announce that it has entered into a joint venture with OJCS Polyus Gold, under which Polymetal will participate in advancing the development of the Nezhdaninskoye gold deposit in Yakutia, Russia ("the Property").
The arrangement will allow Polymetal to acquire up to 50% in the joint venture entity ("JV") holding 100% of JSC South-Verkhoyansk Mining Company ("SVMC") through an earn-in mechanism. SVMC, which is currently a 100% subsidiary of Polyus Gold, holds the mining and exploration licensefor the Property as well as certain infrastructure adjacent to the deposit.
During the first stage ("Stage 1") Polymetal will obtain 15.3%1 interest in the JV. The total amount of Polymetal's investment at this stage will be USD 18 million in cash, of which USD 10 million will be ultimately paid to Polyus Gold and US$ 8 million1 will be invested in SVMC and used to fund exploration activities and expenses of SVMC during the first 15 months;
* Upon completion of Stage 1, Polymetal will have an option to participate in the second stage ("Stage 2") though an earn-in arrangement which will allow Polymetal to increase its share in the JV to 50%;
* Stage 2 investment will comprise USD 72 million in cash1 and will be carried out from month 16 to month 52 from the date of forming the joint venture. The investment will be used to finance construction and ramp-up of the 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 as a party to the EPCM contract with SVMC;
* Upon completion of Stage 2, SVMC will operate as a 50:50 joint venture between Polymetal and Polyus Gold, with Polymetal acting as a managing partner.
* Should Polymetal decide not to proceed with 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 in the JV at the termination date will be redeemed by the JV for nominal value.
The arrangement will allow Polymetal to acquire up to 50% in the joint venture entity ("JV") holding 100% of JSC South-Verkhoyansk Mining Company ("SVMC") through an earn-in mechanism. SVMC, which is currently a 100% subsidiary of Polyus Gold, holds the mining and exploration licensefor the Property as well as certain infrastructure adjacent to the deposit.
During the first stage ("Stage 1") Polymetal will obtain 15.3%1 interest in the JV. The total amount of Polymetal's investment at this stage will be USD 18 million in cash, of which USD 10 million will be ultimately paid to Polyus Gold and US$ 8 million1 will be invested in SVMC and used to fund exploration activities and expenses of SVMC during the first 15 months;
* Upon completion of Stage 1, Polymetal will have an option to participate in the second stage ("Stage 2") though an earn-in arrangement which will allow Polymetal to increase its share in the JV to 50%;
* Stage 2 investment will comprise USD 72 million in cash1 and will be carried out from month 16 to month 52 from the date of forming the joint venture. The investment will be used to finance construction and ramp-up of the 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 as a party to the EPCM contract with SVMC;
* Upon completion of Stage 2, SVMC will operate as a 50:50 joint venture between Polymetal and Polyus Gold, with Polymetal acting as a managing partner.
* Should Polymetal decide not to proceed with 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 in the JV at the termination date will be redeemed by the JV for nominal value.
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