OREANDA-NEWS. Polymetal International plc is pleased to announce that it has entered into a binding agreement with Kazzinc LTD, a subsidiary of Glencore plc, for the acquisition of Orion Minerals LLP ("Orion"), the holding company for the Komarovskoye Gold Deposit ("Komarovskoye") in the Republic of Kazakhstan (the "Acquisition").

Komarovskoye is located in the north-western Kazakhstan, 10 kilometres from the city of Zhitikara (population 35,000) and approximately 187 kilometres by rail from Polymetal's Varvarinskoye mine ("Varvara"). The total area of subsoil licenses at the project is 104km2.

As of 31 December 2015, JORC compliant inferred resources were estimated at 28 Mt at 1.5g/t gold containing approximately 1.4 Moz. Resources are estimated only to the depth of 280m, while mineralisation is traced to the depth of 450m.

The asset comprises an active open pit mine and a 500 ktpa heap leach facility with grid power available on site. Mining at the property commenced in 2006 and has been focused on the oxide mineralization, which now is largely depleted. Over 200 Koz of gold was produced so far. Mining of primary ore and its sale to Varvara commenced in 2010. A total of over 1 Mt at an average grade of 2.5 g/t have been processed at Varvara in 2010-2013 with average recovery of 88%.

Komarovskoye has a direct railway access to Varvara; the nearest railway spur is located less than 2km from the pit.

Komarovskoye is a low-sulphide quartz gold deposit located along the contact of the granite intrusion. Mineralisation occurs within the fault zone and consists of steeply dipping quartz-carbonate-micaceous metasomatites hosted by schists. The overall strike length of Komarovskoye is approximately 6,800m with individual mineralised zones generally 500-600m in length, 4-6m in width. Oxidation depth is limited to 30-50m below surface.

The total consideration payable to Orion at completion is US$ 100 million in cash, which will be satisfied from Polymetal's existing cash balances and available credit facilities. In addition, Kazzinc will receive a deferred consideration ("Royalty") linked to future production from the Komarovskoye and future gold price performance. The royalty will be calculated on a quarterly basis, payable at gold prices above US$ 1,250 per ounce, and capped at a total consideration of US$ 80 million.

Completion of the Acquisition is conditional on certain regulatory approvals, including approval by the Ministry of Investment and Development and anti-monopoly approval in Kazakhstan. Completion is expected to occur in 2016. Polymetal's Net debt/ Adjusted EBITDA will not materially change after the Acquisition compared to 2015 year end (1.97x as at 31/12/2015).

The value of gross assets of the company subject to the transaction (on a 100% share basis) is US$ 28 million and a reported pre-tax loss attributable to these assets is US$ 23 thousand based FY2015 financial accounts.