Polymetal buys gold ore deposit in Armenia
Polymetal continues its expansion in Armenia: the company is going to buy the Kapan gold ore deposit with working GOK, on the basis of which it plans to create a hub for processing, for $50 million in cash and shares. For a while, the asset is unprofitable, and Polymetal will have to improve the productivity at the Kapan deposit and to reduce the costs. Other Russian miners didn’t pay much attention to Armenia, but the country virtually has no large explored deposits, except the Kapan one.
Polymetal is going to buy the active asset Kapan in Armenia – a deposit with resources of 2.6 million gold equivalent ounces (1.4 million ounces of gold, 24 million ounces of silver and 80 tons of copper and 270 thousand tons of zinc, the average gold content is 5 grams per ton), processing plant and infrastructure from Canadian company Dundee Precious Metals Inc.. According to the company, Polymetal will purchase 100% of the Armenian Dundee Precious Metals Kapan, paying $15 million with its new shares (approximately 0.04% of the total amount is in circulation) and $10 million in cash. Polymetal also will pay Dundee annually 2% of royalty on the Kapan project, the total payout is limited with $25 million. The closing of the transaction requires the approval of Dundee creditors (European and Canadian banks), in which shares in assets, including Kapan (the size of the package is not disclosed) are pledged on loans for $32.5 million and regulators. The deal is expected to be closed no later than on June 30.
