Russian firm approves acquisition of gold project in Kazakhstan
The shareholders of the Russian Polymetal International PLC approved the acquisition of Altynalmas Gold Ltd within the General Meeting held on Aug. 14 in London, the company reported.
Altynalmas Gold is the holding company for the Kyzyl gold project in Kazakhstan.
A total number of 99.99 percent of voters voted for the acquisition.
The Kyzyl gold project comprises the Bakyrchik and Bolshevik
gold deposits and is located in north-eastern Kazakhstan. The
acquisition will increase Polymetal's gold equivalent reserves by
approximately 50 percent. Bakyrchik contains 6.7 million ounces of
gold maintaining 7.5 grams of gold per tonne, and its life will
reach 20 years.
Polymetal has entered into binding agreements with Sumeru Gold B.V.
and Sumeru LLP for the acquisition of Altynalmas Gold in May.
The company conditionally agreed to purchase the entire issued share capital of Altynalmas Gold from Sumeru, together with Shareholder Debt owed by Altynalmas Gold to Sumeru.
The consideration for the acquisition of Altynalmas Gold and
related Shareholder Debt comprises an initial consideration of
$318.5 million in cash and the issue of new Polymetal shares with
an aggregate value of $300 million, as determined in the binding
agreements and deferred additional cash consideration up to an
agreed cap to a maximum of $500 million.
Additional cash consideration is contingent on certain conditions
being met and dependent on the relative dynamics of the gold price
and the price of Polymetal's shares over the next seven years. The
additional consideration is intended to compensate Sumeru for any
negative difference between the market performance of the
Consideration Shares and the gold price in the seven-year period
following completion of the acquisition.
Polymetal expects to fund the cash element of the initial consideration from its available undrawn facilities currently totaling $1.3 billion. The company expects to finance the projected capital expenditure with project finance debt and cash flows generated from its existing operations.
The acquisition of Altynalmas Gold is conditional upon receipt
of the required regulatory approvals and fulfillment of other
conditions, and is expected to be completed in the fourth quarter
of 2014.
Polymetal plans to start production at the Kyzyl Project in 2018
upon completion of the feasibility study.