Polymetal International (POLY.L), the Russian
senior gold producer, is now in a position to start the
construction activities on its Nezhda mine by the end of this
quarter as it has now completed the deal wherein it acquired full
ownership of the project. The company had to acquire a final 82.3%
stake from companies controlled/owned by Ivan Kulakov.
This didn’t come cheap, as an initial 7% was acquired for
US$8M in cash, while the remaining 75.3% stake was purchased for a
total amount of US$144M, of which US$10M was a cash payment while
the remaining $134M was settled by issuing almost 13.5M new shares.
This brings the total acquisition cost for acquiring 100% of Nezhda
to US$185M, which represents a price of $42 per gold-equivalent
ounce in the reserves and US$15 per gold-equivalent ounce in the
The All-In Sustaining costs are expected to be around $700-750
per ounce of gold-equivalent during the open pit phase, increasing
to $800-850/oz during the underground mining phase. The after-tax
Internal Rate of Return was estimated at 29%, but this is due to
Polymetal using a relatively low gold price ($1200/oz) and the
relatively long construction period of 2.5-3 years. Keep in mind
this is an asset with a total resource containing 12.4 million
ounces at an average grade of 4.5 g/t gold-equivalent.
Source: FS – Mining B.
Polymetal International acquires 100% ownership of the high-grade Nezhda project