Polymetal can buy Russia's largest silver deposit

Polymetal and Baker Steel Resources Trust Limited signed an agreement to buy 10% stake in Polar Silver Resources for $3 million, the companies said.
Polar Silver controls 50% of Russia's largest undeveloped silver deposit, "Prognoz". The rest of the monitored individuals, writes Polymetal. The deposit is located in Yakutia, its resources - 293 million ounces of silver.

Under the agreement with Polar Silver Resources Polymetal agrees to the end of March 2019 to prepare a feasibility study (FS) project. At Polymetal has an option - until 2020 to buy out the entire stake Baker Steel Resources Trust in Polar Silver Resources to increase and thus share in the project to 50%. deposit ratings for this transaction the parties will conduct further feasibility studies after approval, said Polymetal. The company says the deal so that the field good stocks with high silver content in the ore (from 473 to 773 g per 1 ton), as well as have the opportunity to develop the field relatively quickly without large capital on the basis of open-pit mining costs.

Baker Steel Resources Trust Limited bought a stake in the "Forecast" in October 2016 in Nordgold Alexei Mordashov. The deal amounted to $ 30 million in cash and another $ 40 million of future royalty revenue reported Nordgold. The representative of Baker Steel Resources did not respond to questions "Vedomosti".

Costs for the organization of production on "forecast" may amount to several hundred million dollars, the director to work with the mining industry, American Appraisal Russia Mikhail Leskov. The price at which sells stake Polar Silver, adequate. The field is not developed, there is not even a feasibility study, so more now to get such a project is very difficult. Leskov says that the arrival of Polymetal in the project significantly reduces its risks and facilitates a quick start of full-scale development of the field. "The structure of the deal allows without large initial investment to minimize project risks before making major investment decisions," - are reported words of Polymetal CEO Vitaly Nesis company.

During 2015 Polymetal produced 32.1 million ounces of silver and 861,000 ounces of gold. Total turns out 1.2 million ounces of gold equivalent. During January - September of last year, the company had 22.2 million ounces of silver. Potentially, after reaching full capacity, "forecast" may be similar to the largest deposit of Polymetal - Magadan "Ducat" (15 million ounces of silver per year), says the director of metallurgy and mining Prosperity Capital Management Nick Sosnowski. In today's reality of enhanced ruble and again starts to rise in price of silver (see. Chart) such a project can be attractive for investment. The development of "forecast" the main issue - the complexity of the geology and the accuracy of the historical exploration. Polymetal first wants to do all the preparatory work itself, and only then think you should seriously invest or not, said Sosnowski.