Baku, Azerbaijan, July 15
By Elena Kosolapova - Trend:
The Board of Directors of Russian Polymetal International PLC will approve or reject the acquisition of Altynalmas Gold Ltd (AAG), the holding company for the Kyzyl gold project within the General Meeting, the Russian company reported on July 14.
The General Meeting of Polymetal's Board of Directors will be held on August 14 in London.
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 Ltd (AAG) in May.
The company conditionally agreed to purchase the entire issued share capital of AAG from Sumeru, together with Shareholder Debt owed by AAG to Sumeru.
The consideration for the acquisition of AAG 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 AAG 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.
Edited by C.N.