Polymetal International and its subsidiaries have entered into a definitive agreement with AIM-listed Ovoca Gold to acquire the Russian legal entity Olymp, which holds the mining and exploration license for the Olcha gold-silver deposit.
Polymetal will acquire the Olcha gold-silver deposit together with all inter-company debt owed by Olymp in exchange for 775,000 ordinary shares in Polymetal.
The mining and exploration licence covers an area of 2.5 square kilometers in the Srednekansk district of the Magadan Region in Russia and is located approximately 215 km from the Lunnoye processing plant and 230 kilometres from the Kubaka processing plant, which belong to Polymetal's Dukat and Omolon processing hubs, respectively.
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Olcha mineralisation is of the conventional low-sulfide epithermal type, free milling and with very high-grade bonanza-type shoots.
The audited mineral resource estimate of Olcha in accordance with the JORC Code 2004 guidelines is approximately 653 Koz of gold in 9.2 Mt of mineralised material at an average grade 2.2 g/t at 1.0 g/t cut-off grade.
Polymetal stated: "Polymetal intends to exploit the deposit using much higher cut-off grade with the objective of generating ore with grade exceeding 10 grams per tonne of gold and trucking it to Lunnoye via the winter road. It is currently estimated that approximately 250 Koz of contained gold will be mined under this approach."
The Company plans to start open-pit mining in the first quarter of 2014 and processing in the second quarter of 2014.
Vitaly Nesis, Chief Executive Officer of Polymetal, said: "Olcha represents a good opportunity to add another high-grade source of feed for the Lunnoye plant. In addition, Olcha is a natural extension of our portfolio of advanced exploration properties in the Magadan Region".
Polymetal International is listed on the FTSE 100.
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