Polymetal International has reached an agreement to divest its 100% interest in Khakanja gold-silver operations located in Russia to local buyers due to declining production and high all-in sustaining cash costs (AISC).
Valued at around $30m, the transaction includes the sale of a 600Ktpa processing plant and other associated infrastructure at Khakanja. It also comprises stockpiles at Khakanja, Avlayakan, and Ozernoye deposits with existing ore reserves of around 0.1Moz of gold equivalent (GE).
Assets include advanced exploration properties of Kundumi with estimated mineral resources of 140Koz of GE and Mevachan.
Located in the Okhotsk and Ayan-May municipal districts of the Khabarovsk Territory, these assets are operated by Polymetal’s wholly owned subsidiary Okhotsk Mining and Exploration Company.
Polymetal Group CEO Vitaly Nesis said: “The disposal of Khakanja advances our strategy of selling smaller short-lived assets. I wish Khakanja employees and its new owners success in bringing down costs and finding new reserve ounces, both needed to extend the life of the operation.”
The Khakanja plant became operational in 2003 and has produced around 2Moz of GE so far from four deposits, namely Khakanja proper, Yurievskoye, Ozernoye, and Avlayakan.
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The company employs around 480 people at the operations.
According to Polymetal, the transaction comprises a cash payment of $5m and assumption of net debt of around $25m.
Pre-tax profit from the assets being offloaded stood at around $43m in FY2017.
The company noted that the transaction will result in a loss of around $15m based on the carrying value of the Khakanja operations as of 30 November.
The transaction will be concluded upon the occurrence of the statutory registration procedure, which is expected before the end of this year.
Polymetal is disposing of the operations as the asset contains depleted reserve base with two years of mine life and offers limited near-mine exploration upside.