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Polymetal International Sells Sopka Assets for RUB 800m in Cash
Monday 30 March 2020

Jersey-based mining company Polymetal International plc (LSE: POLY) (ADR: AUCOY) has sold Sopka assets for a total consideration of RUB 800m payable in cash (USD 10m) and 1% Net Smelter Return, the company said.

The assets sold have been ring-fenced into Irbychan Gold LLC, a separate legal entity established to warehouse non-core assets of the Omolon hub.

These assets include low-grade ore stockpiles from Sopka, Dalneye and Oroch deposits as well as mining and exploration licenses for Sopka, Dalneye, and Irbychan deposits.

Mining at the properties ceased in 2018. All of the remaining high-grade ore has been trucked to Kubaka mill for subsequent processing.

Polymetal sold IG to an unrelated Russian private mining company.

The transaction consideration comprises of RUB 800 m fixed upfront cash payment (USD 10m at the RUB/ exchange rate as of the date of closing) and 1% annual NSR payable if gold price exceeds USD1,500/oz.

The royalty proceeds are capped at USD 50m in rouble equivalent.

Additionally, if average gold price in 2022 exceeds USD 1,600/oz, the buyer will be required to compensate any positive FX difference between the values of rouble fixed cash payment made (RUB 800m) as at 31 December 2022 and as at 30 January 2020.

IG was classified as an asset held for sale in FY 2019 financial statements and the company recognised a USD 28m write-down in its consolidated income statement.

According to Polymetal, the fair value of the asset was estimated at USD 13m (RUB 800 m at the RUB/ exchange rate as of 31 December 2019).

Polymetal International (LSE: POLY) (OTC: AUCOY) is a top-20 global gold producer and a top-5 global silver producer with assets in Russia and Kazakhstan.
Date Published: 30/03/2020