The company intends to construct the Nezhda project and has completed a feasibility study for the purpose.
The acquisition of the remaining stake paves the way for the construction activities to commence in the first quarter of 2019.
The acquisition comprises two transactions. Under the first transaction, 7% has been acquired for $8m in cash as part of the shareholder agreement announced on July 17, 2017, and the consideration was paid out in 2017.
The second transaction involved the acquisition of 75.3% stake for $144m, of which $10m is payable in cash and $134m is payable by 13,486,579 newly issued Polymetal shares that constitute 2.9% of Polymetal’s increased share capital.
The number of issued shares has been determined by dividing $134m by $9.95, the five-day arithmetic average closing price of ordinary shares of the company on the main market of the London Stock Exchange (LSE) from November 19 to 23, 2018.
The consideration shares will be subject to a lock-in period of six months following completion of the transaction.
The total consideration paid for the acquisition of Nezhda is $185m.
Polymetal has submitted an application to the LSE and UKLA and the consideration shares are expected to be admitted to trading on the LSE on December 3, 2018.
Construction will commence in Q1 2019 with first production expected in Q4 2021 and a full ramp-up by Q2 2022. Initial capital expenditures are estimated at US$ 234 million.
Key parameters of the feasibility study include: $302m project net present value (NPV) at $1,200/oz gold price and 10% discount rate and a 29% IRR; GE mineral resources (inclusive of ore reserves) of 12.4Moz with an average GE grade of 4.5g/t; and ore reserves comprise 38Mt at an average grade of 3.6g/t GE for 4.4Moz of GE contained.
The study envisages 25 years of production from 2021 to 2045, including 19 years of conventional open-pit mining starting in 2019, followed by 17 years of underground mining from 2029.
