OREANDA-NEWS. On July 09, 2009 “Polymetal” (LSE, MICEX, RTS: PMTL) (“Polymetal” or the “Company”) announced that Polymetal Trading, the Company’s wholly-owned subsidiary engaged in supply chain management, has entered into a long-term loan agreement (the “Loan Agreement”) with NOMOS-BANK for a total amount of EUR9.3 million, reported the press-centre of Polymetal.

The funds to be drawn under the Loan Agreement will be provided to NOMOS-BANK by UniCredit HypoVereinsbank, Munich (“UniCredit”) under the back-to-back loan agreement. Polymetal Trading will use this money to pay for the six grinding mills to be installed at the Company’s Albazino gold project.  The equipment is supplied by the Finnish company Outotec Minerals Oyj. The funds will also be utilized to pay the premium to EKN, an Export Credit Agency (ECA) of Sweden which guaranteed the transaction.

The funds drawn under the Loan Agreement will bear the floating interest rate of 6-month EURIBOR + 4.85% per annum. The principal will have to be repaid within 5 years after commissioning of the mills on Albazino site. Thus, the Loan is expected to mature in Q4 2015.

“We view ECA-covered loans as probably the best way to finance large equipment purchases.  They represent a unique cost-effective instrument to significantly extend duration of our debt portfolio”, said Vitaly Nesis, CEO of Polymetal. “We are delighted to cooperate with UniCredit and NOMOS-BANK, our long-term partners, and look forward to further leverage our relationships with these banks”.

Other equipment items for the Albazino-Amursk project, which are expected to be financed with ECAs, include floatation cells and thickeners (Outotec, Finland), filter presses (Andritz Separation GmbH, Germany), oxygen plant (Air Liquide, France). According to the requirements of Export Credit Agencies, 15% of the contract value must be prepaid by the importer, whereas 85% can be financed under the ECA guarantee.

Based on the total value of the above-mentioned contracts Polymetal estimates that the total value of ECA-covered loans provided by NOMOS-BANK and funded in back-to-back manner by UniCredit, will be approximately EUR25 million.