Polymetal said the mine produced gold-copper-silver and zinc concentrate sold to international markets, and more than $75m had been invested in Kapan over the last five years.
Polymetal International pc said it has expanded its Armenian operations, announcing it had entered into binding agreements with Dundee Precious Metals to acquire that firm’s Kapan Gold Mine project for $25m.
The Kapan property is located in south eastern Armenia, 199 miles from the capital Yerevan. The area surrounding the operation hosted a number of other prospective deposits, including the Lichkvaz gold deposit recently acquired by Polymetal.
As of 31 December 2014, National Instrument 43-101 compliant indicated and inferred resource was estimated at 15.9 megatonnes, containing 1.4m ounces of gold, 24m ounces of silver, 80 kilotonnes of copper and 270 kilotonnes of zinc.
The asset comprised a fully mechanized underground mine with a current capacity of 400 kilotonnes per annum, a conventional 750 kilotonnes per annum flotation concentrator and various infrastructure facilities.
Polymetal said the mine produced gold-copper-silver and zinc concentrate sold to international markets, and more than $75m had been invested in Kapan over the last five years.
“We believe Polymetal can transform Kapan from a low-margin asset into a capital-light profitable regional processing hub with sizable production,” said Vitaly Nesis, Group CEO of Polymetal.
“Opportunistic acquisitions in jurisdictions we know well is the right way to create shareholder value at the current point in the cycle,” he added.
The $25m consideration would consist of $10m payable in cash, to be satisfied from existing cash balances, and $15m payable in Polymetal shares. In addition, Dundee would receive a 2% net smelter return royalty on the future production from Kapan, capped at $25m.
Polymetal said the transaction was still conditional on regulatory approval, and was expected to be completed in the second quarter.
