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. Last Updated: 07/27/2016

Polymetal Acquires Deposits in Kazakhstan

Polymetal agreed to its first foreign acquisition by buying a Kazakh gold and copper deposit from Orsu Metals, the company said Monday in a statement distributed by London's Regulatory News Service.

Polymetal will pay $8 million in cash for the Varvarinskoye deposit and a further sum of as much as $12 million, dependent on copper and gold prices.

Polymetal has reached a preliminary agreement with lenders on restructuring the mine's debt and hedging obligations until 2013 and 2014. Orsu held $73 million in debt and gold forward contracts totaling 338,468 ounces with an estimated loss of $140 million, it added.

Polymetal is buying deposits as smaller operators struggle to raise funds. Polymetal has this year announced the acquisition of the Goltsovoye silver deposit, the Sopka Kvartsevaya gold field from billionaire Lev Leviev and the Mayskoye gold deposit from Highland Gold Mining. The company said May 14 that it planned to sell new shares equivalent to as much as a quarter of outstanding equity to fund purchases.

The latest deal allows Polymetal "to establish a foothold in Kazakhstan, which is the country we believe is ideal for the company's first expansion outside of Russia," chief executive Vitaly Nesis said in the statement.

Varvarinskoye, in northwestern Kazakhstan, has probable gold reserves of 1.34 million ounces and copper reserves of 151 million pounds, Polymetal said. In the first quarter, the mine produced 13,599 ounces of gold and 1,743 tons of copper.