Polymetal to acquire Orion Minerals from Glencore for $100m

4 April 2016 (Last Updated April 4th, 2016 18:30)

Polymetal International has signed an agreement to acquire Orion Minerals, the holding company for the Komarovskoye gold deposit in the Republic of Kazakhstan from Glencore's subsidiary Kazzinc for $100m.

Polymetal International has signed an agreement to acquire Orion Minerals, the holding company for the Komarovskoye gold deposit in the Republic of Kazakhstan from Glencore's subsidiary Kazzinc for $100m.

Komarovskoye is located 10km from the city of Zhitikara and 187km by rail from Polymetal's Varvarinskoye mine (Varvara).

The deposit consists of an active open pit mine and a 500 kilotonne per annum (ktpa) heap leach facility with grid power that is available on site.

“Ore processing at the Varvara plant is expected to start within three months once the transaction concludes.”

Mining at Komarovskoye began in 2006 with focus on the oxide mineralisation and more than 200 thousand ounces (koz) of gold has been produced to date.

In 2010, primary ore mining and its sale to Varvara commenced, and totalled more than one million tonnes (Mt), at an average grade of 2.5g/t has been processed at Varvara in 2010-2013.

Polymetal said that the acquisition is in line with the company's processing hub strategy and provides an open-pittable ore feed for Varvara.

The company aims to mine, deliver by rail and process up to one million tonnes per annum (Mtpa) of ore at Varvara, which may also increase its annual production by about 70Koz.

Ore processing at the Varvara plant is expected to start within three months once the transaction concludes.

Polymetal International Group CEO Vitaly Nesis said: "Komarovskoye has long been in our sights as a natural close fit for our Varvara hub.

"We are very excited about the transaction which is expected to strengthen production profile, lower costs, and provide substantial incremental cash flows at Varvara in the near term."

Completion of the acquisition is subject to regulatory approvals, including approval by the Ministry of Investment and Development and anti-monopoly approval in Kazakhstan.

The acquisition is expected to conclude in 2016.