Polymetal Secures Mayskoye Concentrate Off-Take for 2013
OREANDA-NEWS. June 18, 2013. Polymetal International plc (LSE: POLY) (together with its subsidiaries, including JSC “Polymetal” – “Polymetal”, the “Company”, or the “Group”) is pleased to announce that it has signed two export sales contracts with Chinese off-takers for a total volume of up to 50 Kt of refractory gold concentrate produced at the Mayskoye mine, to be delivered in 2013.
Under the first of these contracts, the Company will sell 15 Kt of concentrate, with the option to increase this volume to up to 35 Kt at Polymetal’s discretion). The first shipment under this contract is expected in late July – early August 2013, immediately after the start of navigation at the port of Pevek.
Under the second contract (entered into with a different off-taker), Polymetal will sell 5 Kt of concentrate with the option of selling up to an additional 10 Kt of concentrate. The Company anticipates that the first shipment under this contract shall occur in late August – early September 2013.
The average grade in the concentrate to be sold in 2013 is expected to be around 55g/t gold. The Company estimates that the extra cost of selling the Mayskoye concentrate to off-takers, versus processing it at the Amursk pressure oxidation (“POX”) facility, is approximately US\\$250 per ounce of gold.
Polymetal believes that shipping Mayskoye concentrate to several third-party off-takers in 2013 creates a significant strategic optionality that will allow the Company to achieve better terms in relation to long-term sales arrangements to be negotiated with selected buyers in Q1 2014. With this in mind, the Company is currently evaluating two more potential options for 2013 with the off-takers outside China, with the final decision expected to be made by the end of June 2013.
“Entering into multiple off-take contracts for Mayskoye is an important achievement for Polymetal” said Vitaly Nesis, CEO of Polymetal. “It will allow us to start generating free cash flows at our newest mine in Q3 and removes one of the key uncertainties for the Albazino expansion project”.