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Polymetal to acquire Komarovskoye gold deposit in Kazakhstan from Glencore

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Polymetal to acquire Komarovskoye gold deposit in Kazakhstan from Glencore

Polymetal InternationalPlc said April 4 that it will acquire the Komarovskoye gold deposit, located in the Republicof Kazakhstan, from Glencore Plcfor US$100 million in cash and up to US$80 million in royalties.

The company entered into a binding agreement with Glencore unitKazzinc Ltd. for the acquisitionof Orion Minerals LLP, which holds Komarovskoye.

The asset comprises an active open pit mine and a 500,000 tonne-per-annumheap leach facility with grid power available on site.

In addition to the US$100 million payable at completion, Kazzincwill receive a deferred consideration linked to future production from Komarovskoyeand future gold price performance. The royalty will be calculated on a quarterlybasis, payable at gold prices above US$1,250 per ounce, and capped at a total considerationof US$80 million.

Completion of the acquisition is expected this year and is conditionalon certain regulatory approvals.

Polymetal expects to estimate JORC-compliant ore reserves atKomarovskoye by the end of the year, and plans to process the ore at its Varvarinskoyemine.

The initial investment is expected to be less than US$5 millionas the mine fleet will be mostly transferred from Varvarinskoye and complementedby contractors, Polymetal said.

Polymetal returnedto profit in 2015, booking net earnings of US$221 million, comparedwith the US$210 million net loss the previous year.