Polymetal International has signed an agreement to a further acquire a 45% interest in the Prognoz silver property in Far Eastern Russia in an all-share deal valued at $72m.

The proposed acquisition will allow the company to increase its stake in the asset to 50%.

Prognoz is an undeveloped primary silver deposit, covering an area of 56km² in the Verkhoyansk municipal district in the Republic of Sakha (Yakutia).

The property is said to have a Joint Ore Reserves Committee Code (JORC) compliant indicated and inferred resources of 292Moz at 586g/t silver.

Polymetal International group CEO Vitaly Nesis said: “I believe Prognoz will in due course replace Dukat as one of the top three primary silver mines of the world.

“I am very excited about increasing our ownership of this asset, which will underpin our long-term growth in production and cash-flows.”

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Under the deal, Polymetal is also required to pay Polar a net smelter return (NSR) royalty of between 2% and 4% on the asset.

The acquisition is expected to give the company access to a large resource with high-grades and significant exploration upside. The company expects the wide veins with direct surface outcrop on the asset to allow open-pit mining.

“I believe Prognoz will in due course replace Dukat as one of the top three primary silver mines of the world.”

Last year, Polymetal completed 37km of diamond drilling and set-up basic remote-site infrastructure on the asset.

As part of this year’s work programme, the project partners will undertake 46km of drilling and in-house metallurgical test work.

It is expected that the partners will provide an updated JORC-compliant resource estimate in the fourth quarter of this year, while pre-feasibility study is slated for next year.

A feasibility study and reserve update are planned to be carried out in the fourth quarter of 2020, leading to potential investment decision in the first half of the following year.

The company is targeting full run-rate of production in 2024.

Closure of the transaction is dependent on receipt of the required regulatory approvals and is scheduled to take place in the first quarter of this year.

Russian private equity group Garden Ring Capital owns the remaining 50% of Prognoz.