Russia’s Polyus Gold, Polymetal create JV for Nezhdaninskoye field

MOSCOW, Dec 24 (PRIME) -- Russian gold producers Polyus Gold and Polymetal International have established a joint venture for development of Polyus Gold ‘s Nezhdaninskoye gold field in the Republic of Yakutia, which will own 100% in South-Verkhoyansk Mining Company (SVMC), the two companies said in a joint statement Thursday.

“During the first stage Polymetal will obtain 15.3% interest in the JV. The total amount of Polymetal’s investment at this stage will be U.S. $18 million in cash, of which $10 million will be ultimately paid to Polyus Gold and $8 million will be invested in SVMC and used to fund exploration activities and expenses of SVMC during the first 15 months,” the statement read.

Under the second stage, Polymetal will be allowed to receive the stake in the venture to 50% for about $72 million, which will be transferred in the period from 16th month from the venture’s establishment through 52nd month. “The investment will be used to finance construction and ramp-up of the underground mine and processing plant,” the companies said.

“Should Polymetal decide not to proceed with stage 2, the joint venture arrangement will terminate after stage 1 with no further amounts to be paid or received by the parties, and the whole of Polymetal’s interest in the JV at the termination date will be redeemed by the JV for nominal value,” the statement read.

Resources of the Nezhdaninskoye field exceed 20 million ounces of gold, or 632 tonnes, in refractory ores. In 2009, Polyus gold reached an agreement with Canada’s Kinross Gold for the field’s development, but it broke through in 2011. In 2013, Polyus Gold wrote off $250 million due to the project’s cost and a fall of gold prices and said the field’s development is under question.

End