Polymetal International Plc on Jan. 19 said it struck deal with Polar Silver Resources Ltd. to acquire up to a 50% stake in the Prognoz silver deposit in Yakutia, Russia.

The London-listed company will acquire a 5% indirect interest in the project by investing US$3 million cash by purchasing 10% of Polar's share capital.

Under the arrangement, Polymetal must spend US$10 million per annum over the next three years to conduct a 25-kilometer diamond drilling program and complete an externally audited, JORC-compliant reserves estimate for the property by March 31, 2019.

Upon meeting these conditions, Polymetal will exercise the option to acquire the remaining 45% stake, the price of which will be determined at that time. The price for the option exercise will depend on spot silver prices and the size of the estimated reserves, among other considerations.

The Prognoz deposit covers 56 square kilometers and is the largest undeveloped silver deposit in Russia, with JORC-compliant measured and indicated resources of 292 million ounces at 586 g/t of silver at a 100 g/t cutoff grade, as of May 30, 2009.