Polyus to sell 82% in Nezhdaninskoye gold deposit for $158 mln

MOSCOW, Mar 21 (PRIME) -- Russian gold producer Polyus will sell an 82.34% stake in the Nezhdaninskoye gold deposit for U.S. $158 million to a company beneficially controlled by Ivan Kulakov, a former managing director of Highland Gold Mining, Polyus said in a statement on Tuesday.

The payment will consist of two tranches: $100 million will be paid upon completion of the stake transfer and the remaining $58 million will be paid once the project meets certain operational and financial criteria. Completion of the deal will be subject to obtaining all necessary corporate and regulatory approvals.

Polyus CEO Pavel Grachyov said commenting on the deal, as quoted in the statement: “The successful completion of the deal will enable Polyus to focus management and financial resources on its current pipeline of large-scale open-pit projects and achieving our production target of at least 2.7 million ounces by 2020.”

The deposit’s C1+C2 gold reserves are estimated at 20.3 million ounces, or 632 tonnes, with gold content of 5.1 grams per tonne, as calculated under Russian standards. The company bought the field in 2006 and had to write off about $250 million of its value in 2013 because of a gold price fall.

Polyus established a joint venture to develop the field with Polymetal in 2015. Polymetal now holds 18% in the joint venture.

Polymetal said in a statement that the key terms of the joint venture operation and the earn-in mechanism for the company will remain unchanged. Polymetal will decide on its participation in the second stage of the joint venture establishment until July 2017. The company is also discussing details of the joint development of the field with Kulakov and continues exploration and technical works at the field.

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