PRESS: Polymetal may spend $250 mln on Petropavlovsk’s POX unit

MOSCOW, Jun 27 (PRIME) -- Gold and silver producer Polymetal International is ready to buy a pressure oxidation unit (POX) from Russia-focused gold producer Petropavlovsk Plc for U.S. $250 million, Kommersant business daily reported on Wednesday quoting sources.

Polymetal is even ready to finish construction of the unit on its own and to buy 300,000 tonnes of refractory ore concentrate from Petropavlovsk per year to refine it at the unit. Polymetal already submitted the proposal to its board of directors, and wants to coordinate conditions of the deal until the end of September, Kommersant reported.

“Petropavlovsk’s financial consultants saw the sale of the whole company as an optimal solution, but Polymetal wants no assets other than POX. Polymetal needs POX to raise its own refining of refractory ores from the Kyzyl field in Kazakhstan and from other fields,” a source told the business daily.

Petropavlovsk owns 31.1% in ore mining company IRC and acts as a guarantor for its loan taken from China’s ICBC, of which $234 million is left for redemption. IRC has no money, and Petropavlovsk has already lent it $30 million. Petropavlovsk’s net debt, represented by bonds, stood at $585 million as of the end of 2017, and a default of IRC means a cross default of the gold producer, the business daily said.

A Petropavlovsk representative said that the company receives acquisition offers regularly, but is not in talks and had no agreements that require a regulatory approval.

Petropavlovsk launched construction of the POX Hub in 2013 and planned to launch it until the end of 2018. The unit is to refine 500,000 tonnes of concentrate per year and produce 220,000 ounces of gold on average per year in 2019–2032.

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